The Wisdom of Crowds

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pages: 475 words: 134,707

The Hype Machine: How Social Media Disrupts Our Elections, Our Economy, and Our Health--And How We Must Adapt by Sinan Aral

Airbnb, Albert Einstein, algorithmic bias, AlphaGo, Any sufficiently advanced technology is indistinguishable from magic, AOL-Time Warner, augmented reality, behavioural economics, Bernie Sanders, Big Tech, bitcoin, Black Lives Matter, Cambridge Analytica, carbon footprint, Cass Sunstein, computer vision, contact tracing, coronavirus, correlation does not imply causation, COVID-19, crowdsourcing, cryptocurrency, data science, death of newspapers, deep learning, deepfake, digital divide, digital nomad, disinformation, disintermediation, Donald Trump, Drosophila, Edward Snowden, Elon Musk, en.wikipedia.org, end-to-end encryption, Erik Brynjolfsson, experimental subject, facts on the ground, fake news, Filter Bubble, George Floyd, global pandemic, hive mind, illegal immigration, income inequality, Kickstarter, knowledge worker, lockdown, longitudinal study, low skilled workers, Lyft, Mahatma Gandhi, Mark Zuckerberg, Menlo Park, meta-analysis, Metcalfe’s law, mobile money, move fast and break things, multi-sided market, Nate Silver, natural language processing, Neal Stephenson, Network effects, performance metric, phenotype, recommendation engine, Robert Bork, Robert Shiller, Russian election interference, Second Machine Age, seminal paper, sentiment analysis, shareholder value, Sheryl Sandberg, skunkworks, Snapchat, social contagion, social distancing, social graph, social intelligence, social software, social web, statistical model, stem cell, Stephen Hawking, Steve Bannon, Steve Jobs, Steve Jurvetson, surveillance capitalism, Susan Wojcicki, Telecommunications Act of 1996, The Chicago School, the strength of weak ties, The Wisdom of Crowds, theory of mind, TikTok, Tim Cook: Apple, Uber and Lyft, uber lyft, WikiLeaks, work culture , Yogi Berra

After looking under the hood, I’ll zoom out to consider the societal implications of the Hype Machine and the three trends it perpetuates—for example, its implications for what’s known as the “wisdom of crowds.” Our ability to harness the wisdom of crowds and collective intelligence rests on three basic pillars: independence, diversity, and equality. The problem is that the Hype Machine erodes all three of these pillars and turns wisdom into madness. I’ll discuss how we can recapture the wisdom of crowds in Chapter 10. Next, I’ll remind us why we invented the Hype Machine in the first place by describing its positive potential in creating an incredible tsunami of productivity, innovation, social welfare, democratization, equality, caring, positivity, unity, and social progress.

These new suggestions resulted in more flu searches, leading GFT to think there was more flu than actually existed. It’s a dramatic example of how software code determines the Hype Machine’s impact. Small algorithm changes helped turn a leading example of the wisdom of crowds into madness by overturning one of the three pillars on which the wisdom of crowds rests—by injecting interdependence into what were previously independent opinions. Wise crowds, the theory goes, typically require three things: independence, diversity, and equality. The problem is that the Hype Machine undermines all of them. Independence Crowds predict accurately because they cancel out individuals’ errors.

I, for one, would welcome the diversity. Equality The wisdom of crowds is, at its core, a mathematical concept about patterns of collective or aggregated opinion, in teams, communities, and societies. But the math has evolved since Francis Galton first worked out our collective intelligence about ox weights. The most significant advance in our thinking about crowd wisdom in the last decade has been to realize (and formally consider) how crowds are organized into collectives by the networks that connect them. When we extended the wisdom of crowds to networks, we discovered the supreme importance of equality to wisdom.


pages: 256 words: 60,620

Think Twice: Harnessing the Power of Counterintuition by Michael J. Mauboussin

affirmative action, Alan Greenspan, asset allocation, Atul Gawande, availability heuristic, Benoit Mandelbrot, Bernie Madoff, Black Swan, butter production in bangladesh, Cass Sunstein, choice architecture, Clayton Christensen, cognitive dissonance, collateralized debt obligation, Daniel Kahneman / Amos Tversky, deliberate practice, disruptive innovation, Edward Thorp, experimental economics, financial engineering, financial innovation, framing effect, fundamental attribution error, Geoffrey West, Santa Fe Institute, George Akerlof, hindsight bias, hiring and firing, information asymmetry, libertarian paternalism, Long Term Capital Management, loose coupling, loss aversion, mandelbrot fractal, Menlo Park, meta-analysis, money market fund, Murray Gell-Mann, Netflix Prize, pattern recognition, Performance of Mutual Funds in the Period, Philip Mirowski, placebo effect, Ponzi scheme, power law, prediction markets, presumed consent, Richard Thaler, Robert Shiller, statistical model, Steven Pinker, systems thinking, the long tail, The Wisdom of Crowds, ultimatum game, vertical integration

You now know where you are most likely to get the most viewing pleasure. What Jelly Beans Reveal About the Wisdom of the Crowd The Best Buy example, where a collection of partially informed nonexperts did better than experts, shows our second decision mistake: relying on experts instead of the wisdom of crowds. Understanding why collectives are often wise—and sometimes very unwise—requires us to look under the hood at how the wisdom of crowds works. But before proceeding, give the question some thought. How is it that a group of nonexperts can predict better than the resident expert? Scott Page, a social scientist who has studied problem solving by groups, offers a very useful approach for understanding collective decision making.

• Chapter 3, “The Expert Squeeze: Why Netflix Knows More Than Clerks Do About Your Favorite Films,” highlights our uncritical reliance on experts. Experts tend to know about very narrow fields, justifying a skeptical view of the claims and predictions they make. Increasingly, people can more effectively solve problems by making models of decisions using computers or by accessing the wisdom of crowds than by relying on experts. • Chapter 4, “Situational Awareness: How Accordion Music Boosts Sales of Burgundy,” underscores the crucial role of context in decision making. As much as we like to think of ourselves as objective, the behavior of those around us exerts extraordinary influence on our decisions.

The stakes are especially high for consumer electronics firms because they generate so much of their revenue during the gift-giving season and the value of their inventory depreciates rapidly. The pressure is really on the internal experts at consumer-electronics giant Best Buy, one of a multitude of retailers that rely on specialists. So you can imagine the reaction when James Surowiecki, author of the best-selling book The Wisdom of Crowds, strolled into Best Buy’s headquarters and delivered a startling message: a relatively uninformed crowd could predict better than the firm’s best seers.1 Surowiecki’s message resonated with Jeff Severts, an executive then running Best Buy’s gift-card business. Severts wondered whether the idea would really work in a corporate setting, so he gave a few hundred people in the organization some basic background information and asked them to forecast February 2005 gift-card sales.


pages: 326 words: 106,053

The Wisdom of Crowds by James Surowiecki

Alan Greenspan, AltaVista, Andrei Shleifer, Apollo 13, asset allocation, behavioural economics, Cass Sunstein, classic study, congestion pricing, coronavirus, Daniel Kahneman / Amos Tversky, experimental economics, Frederick Winslow Taylor, George Akerlof, Great Leap Forward, Gregor Mendel, Howard Rheingold, I think there is a world market for maybe five computers, interchangeable parts, Jeff Bezos, John Bogle, John Meriwether, Joseph Schumpeter, knowledge economy, lone genius, Long Term Capital Management, market bubble, market clearing, market design, Monkeys Reject Unequal Pay, moral hazard, Myron Scholes, new economy, offshore financial centre, Picturephone, prediction markets, profit maximization, Richard Feynman, Richard Feynman: Challenger O-ring, Richard Thaler, Robert Shiller, Ronald Coase, Ronald Reagan, seminal paper, shareholder value, short selling, Silicon Valley, South Sea Bubble, tacit knowledge, The Nature of the Firm, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Toyota Production System, transaction costs, ultimatum game, vertical integration, world market for maybe five computers, Yogi Berra, zero-sum game

THE WISDOM OF CROWDS WHY THE MANY ARE SMARTER THAN THE FEW AND HOW COLLECTIVE WISDOM SHAPES BUSINESS, ECONOMIES, SOCIETIES, AND NATIONS JAMES SUROWIECKI DOUBLEDAY New York London Toronto Sydney Auckland CONTENTS Cover Page Title Page Dedication Introduction PART I 1. The Wisdom of Crowds 2. The Difference Difference Makes: Waggle Dances, the Bay of Pigs, and the Value of Diversity 3. Monkey See, Monkey Do: Imitation, Information Cascades, and Independence 4. Putting the Pieces Together: The CIA, Linux, and the Art of Decentralization 5. Shall We Dance?: Coordination in a Complex World 6.

Yet despite all these limitations, when our imperfect judgments are aggregated in the right way, our collective intelligence is often excellent. This intelligence, or what I’ll call “the wisdom of crowds,” is at work in the world in many different guises. It’s the reason the Internet search engine Google can scan a billion Web pages and find the one page that has the exact piece of information you were looking for. It’s the reason it’s so hard to make money betting on NFL games, and it helps explain why, for the past fifteen years, a few hundred amateur traders in the middle of Iowa have done a better job of predicting election results than Gallup polls have. The wisdom of crowds has something to tell us about why the stock market works (and about why, every so often, it stops working).

Library of Congress Cataloging-in-Publication Data Surowiecki, James, 1967– The wisdom of crowds : why the many are smarter than the few and how collective wisdom shapes business, economies, societies, and nations / James Surowiecki. p. cm. Includes bibliographical references. 1. Consensus (Social sciences) 2. Common good. I. Title. JC328.2.S87 2003 303.3'8—dc22 2003070095 eISBN 0-307-27505-1 Copyright © 2004 by James Surowiecki All Rights Reserved www.anchorbooks.com v1.0 THE WISDOM OF CROWDS WHY THE MANY ARE SMARTER THAN THE FEW AND HOW COLLECTIVE WISDOM SHAPES BUSINESS, ECONOMIES, SOCIETIES, AND NATIONS JAMES SUROWIECKI DOUBLEDAY New York London Toronto Sydney Auckland


pages: 733 words: 179,391

Adaptive Markets: Financial Evolution at the Speed of Thought by Andrew W. Lo

Alan Greenspan, Albert Einstein, Alfred Russel Wallace, algorithmic trading, Andrei Shleifer, Arthur Eddington, Asian financial crisis, asset allocation, asset-backed security, backtesting, bank run, barriers to entry, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, bitcoin, Bob Litterman, Bonfire of the Vanities, bonus culture, break the buck, Brexit referendum, Brownian motion, business cycle, business process, butterfly effect, buy and hold, capital asset pricing model, Captain Sullenberger Hudson, carbon tax, Carmen Reinhart, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computerized trading, confounding variable, corporate governance, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, Daniel Kahneman / Amos Tversky, delayed gratification, democratizing finance, Diane Coyle, diversification, diversified portfolio, do well by doing good, double helix, easy for humans, difficult for computers, equity risk premium, Ernest Rutherford, Eugene Fama: efficient market hypothesis, experimental economics, experimental subject, Fall of the Berlin Wall, financial deregulation, financial engineering, financial innovation, financial intermediation, fixed income, Flash crash, Fractional reserve banking, framing effect, Glass-Steagall Act, global macro, Gordon Gekko, greed is good, Hans Rosling, Henri Poincaré, high net worth, housing crisis, incomplete markets, index fund, information security, interest rate derivative, invention of the telegraph, Isaac Newton, it's over 9,000, James Watt: steam engine, Jeff Hawkins, Jim Simons, job satisfaction, John Bogle, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, Joseph Schumpeter, Kenneth Rogoff, language acquisition, London Interbank Offered Rate, Long Term Capital Management, longitudinal study, loss aversion, Louis Pasteur, mandelbrot fractal, margin call, Mark Zuckerberg, market fundamentalism, martingale, megaproject, merger arbitrage, meta-analysis, Milgram experiment, mirror neurons, money market fund, moral hazard, Myron Scholes, Neil Armstrong, Nick Leeson, old-boy network, One Laptop per Child (OLPC), out of africa, p-value, PalmPilot, paper trading, passive investing, Paul Lévy, Paul Samuelson, Paul Volcker talking about ATMs, Phillips curve, Ponzi scheme, predatory finance, prediction markets, price discovery process, profit maximization, profit motive, proprietary trading, public intellectual, quantitative hedge fund, quantitative trading / quantitative finance, RAND corporation, random walk, randomized controlled trial, Renaissance Technologies, Richard Feynman, Richard Feynman: Challenger O-ring, risk tolerance, Robert Shiller, Robert Solow, Sam Peltzman, Savings and loan crisis, seminal paper, Shai Danziger, short selling, sovereign wealth fund, Stanford marshmallow experiment, Stanford prison experiment, statistical arbitrage, Steven Pinker, stochastic process, stocks for the long run, subprime mortgage crisis, survivorship bias, systematic bias, Thales and the olive presses, The Great Moderation, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Malthus, Thorstein Veblen, Tobin tax, too big to fail, transaction costs, Triangle Shirtwaist Factory, ultimatum game, uptick rule, Upton Sinclair, US Airways Flight 1549, Walter Mischel, Watson beat the top human players on Jeopardy!, WikiLeaks, Yogi Berra, zero-sum game

How we choose to deploy these powerful technologies makes all the difference, in the financial world just as in nuclear physics. That’s why we need the Adaptive Markets Hypothesis. We need a new narrative to make sense of the wisdom of crowds, the madness of mobs, and evolution at the speed of thought. Our search for this new narrative begins with a terrible catastrophe. If markets truly reflect the wisdom of crowds, the market reaction to this catastrophe will illustrate just how wise crowds can be. CHAPTER 1 Are We All Homo economicus Now? TRAGEDY AND THE WISDOM OF CROWDS At 11:39 a.m. on Tuesday, January 28, 1986, the Space Shuttle Challenger took off from the Kennedy Space Center at Cape Canaveral.

And it implies that changing business conditions and adaptive responses are often more important drivers of investor behavior and market dynamics than enlightened self-interest—the wisdom of crowds is sometimes overwhelmed by the madness of mobs. This isn’t to say that rational economics is of no value; on the contrary, financial economics is still among the most highly sought-after fields of expertise on Wall Street (especially if the starting salaries of finance Ph.D.s are any indication). The madness of mobs eventually subsides and is replaced by the wisdom of crowds—at least until the next shock disrupts the status quo. From the adaptive markets perspective, the Efficient Markets Hypothesis isn’t wrong—it’s just incomplete.

Moreover, the market was able to accomplish this without its buyers and sellers having any special technical expertise about aerospace disasters. A catastrophic explosion might suggest a failure in the fuel tanks, made by Morton Thiokol, which turned out to be the case. James Surowiecki, the business columnist for The New Yorker, called this an example of the wisdom of crowds.8 If the Efficient Markets Hypothesis is true—and the Challenger example certainly implies it is—the wisdom of crowds has enormously far-reaching consequences. A RANDOM WALK THROUGH HISTORY Markets are mysterious things to the layperson, and this is nothing new. People have been trying to understand the behavior of markets for hundreds if not thousands of years.


pages: 266 words: 87,411

The Slow Fix: Solve Problems, Work Smarter, and Live Better in a World Addicted to Speed by Carl Honore

Albert Einstein, An Inconvenient Truth, Apollo 13, Atul Gawande, Broken windows theory, call centre, carbon credits, Checklist Manifesto, clean water, clockwatching, cloud computing, crowdsourcing, Dava Sobel, delayed gratification, drone strike, Enrique Peñalosa, Erik Brynjolfsson, Ernest Rutherford, Exxon Valdez, fail fast, fundamental attribution error, game design, Great Leap Forward, income inequality, index card, invention of the printing press, invisible hand, Isaac Newton, Jeff Bezos, John Harrison: Longitude, lateral thinking, lone genius, medical malpractice, microcredit, Netflix Prize, no-fly zone, planetary scale, Ralph Waldo Emerson, RAND corporation, reality distortion field, retail therapy, shareholder value, Silicon Valley, Skype, stem cell, Steve Jobs, Steve Wozniak, TED Talk, the scientific method, The Wisdom of Crowds, ultimatum game, urban renewal, War on Poverty

Chapter 9 – Crowdsource: The Wisdom of the Masses Wutbürger as German word of the year: Full list available from German Language Society at http://www.gfds.de/aktionen/wort-des-jahres/ Guessing the weight of an ox: James Surowiecki, The Wisdom of Crowds (New York: Random, 2005), pp. xii-xiii. Pinpointing vessel lost at sea: Surowiecki, The Wisdom of Crowds, pp. xx-xxi. Public identifies Mars craters: Surowiecki, The Wisdom of Crowds, p. 276. Diversity Trumps Ability Theorem: Based on my interview with Scott Page. John Harrison: For the whole story check out Dava Sobel, Longitude: The True Story of a Lone Genius Who Solved the Greatest Scientific Problem of His Time (London: Fourth Estate, 1998).

Nearly half of financial services firms do not rescue floundering projects: From a 2011 report by the Economist Intelligence Unit entitled “Proactive response – How mature financial services firms deal with troubled projects.” Climbing corporate ladder by concealing bad news: James Surowiecki, The Wisdom of Crowds (New York: Anchor, 2004), p. 205. Four of every five products perish in first year: James Surowiecki, The Wisdom of Crowds (New York: Anchor, 2004), p. 218. Domino’s television commercials: Full details of the campaign available at http://www.pizzaturnaround.com/. Fedex apologizes: Blog post and video apology at http://blog.fedex.designcdt.com/absolutely-positively-unacceptable Soothing effect of apology: M.C.

Chapter 11 – Devolve: Self-Help (in a Good Way) Starbucks’ Schultz accuses speculators: Debarati Roy, “Coffee Speculation Inflates Price, Hurts Demand, Starbucks Says,” Bloomberg, 18 March 2011. Demes solved local problems in Ancient Greece: James Surowiecki, The Wisdom of Crowds (New York: Random, 2005), p. 71. Subsidiarity and Catholicism: Don Fier, “The Principle of Subsidiarity and the ‘Welfare State’,” at CatholicCulture.org. Staff-owned companies more resilient and productive: From “Model Growth: Do Employee-Owned Businesses Deliver Sustainable Performance?” a 2010 report by Cass Business School for John Lewis Group. Research showing people work better when they feel ownership: Surowiecki, The Wisdom of Crowds, p. 210. Nurses at Georgetown University Hospital: V. Dion Haynes, “What Nurses Want,” Washington Post, 13 September 2008.


ucd-csi-2011-02 by Unknown

bioinformatics, en.wikipedia.org, pattern recognition, The Wisdom of Crowds

Perhaps the epicentre of this debate has been the Nature article favorably comparing the quality of Wikipedia entries to those in the Encyclopædia Britannica [5] and the robust response to this article from the Britannica owners 1 . The truth is that sometimes Wikipedia is effective at harnessing the wisdom of crowds to produce excellent authoritative articles and sometimes Wikipedia articles are quite poor – often because they are not the result of much collaboration. The best Wikipedia content as represented by Featured Articles2 and A and even GA class articles on the Wikipedia Quality Scale reach a very high standard 3 .

In contrast to traditional encyclopedias, where authority derives from expert contributors, Wikipedia depends on collaboration and consensus to produce quality articles. There has been some controversial research that suggests that the quality of Wikipedia articles approaches that of established encyclopedias [5]. The famous quote from Surowiecki’s The Wisdom of Crowds is that ”under the right circumstances, groups are remarkably intelligent” [11]. The challenge when using Wikipedia is to determine whether the circumstances that produced the article in question were right or not. The first requirement for a Wikipedia article to be authoritative is the many eyes idea [8] – a significant group of contributors must have cooperated to produce the article.

Practical graph isomorphism. Congressus Numerantium, 30(30):47–87, 1981. [10] R. Milo, S. Itzkovitz, N. Kashtan, R. Levitt, S. Shen-Orr, I. Ayzenshtat, M. Sheffer, and U. Alon. Superfamilies of evolved and designed networks. Science, 303(5663):1538, 2004. [11] J. Surowiecki, M.P. Silverman, et al. The wisdom of crowds. American Journal of Physics, 75:190, 2007. 6


pages: 314 words: 94,600

Business Metadata: Capturing Enterprise Knowledge by William H. Inmon, Bonnie K. O'Neil, Lowell Fryman

affirmative action, bioinformatics, business cycle, business intelligence, business process, call centre, carbon-based life, continuous integration, corporate governance, create, read, update, delete, database schema, en.wikipedia.org, folksonomy, informal economy, knowledge economy, knowledge worker, semantic web, tacit knowledge, The Wisdom of Crowds, web application

It seems, however, that the socialization of knowledge is much broader than mini-collectives. 6.5 Socialization of Knowledge 6.5.1.1 97 Knowledge Socialization and the Wisdom of Crowds Don Tapscott, in Wikinomics, uses the term collective intelligence, which he defines as “the aggregate knowledge that emerges from the decentralized choices and judgments of groups of independent participants” (Tapscott, 2006, p. 41). Tapscott also discusses James Surowiecki’s provocative book, The Wisdom of Crowds, in which Surowiecki proposes that a crowd or a group is usually more accurate than an expert alone. The subtitle of his book is Why the Many Are Smarter than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations.

It touches upon many trends evident in the use of technology today, by businesspeople and technical people alike. Although we will discuss traditional metadata technology, we will also venture into technology subjects such as: ✦ Web 2.0 ✦ “The Semantic Web” ✦ Collaboration and Groupware ✦ “The Wisdom of Crowds” ✦ Data Management and Governance The proper exploitation of business metadata, by both technologists and businesspeople, can revolutionize the use of technology, making it the facilitator of enterprise knowledge that it was always meant to be. Technology can lend assistance to how business metadata can enable business to be conducted on many levels, from facilitating communication and fostering true understanding to providing background information so that appropriate decisions can be made.

The existence of many abandoned searches could be an indicator that the taxonomy is hindering, not helping, the search process. 4.5.2.8 Self-Organizing Tags What if you let everyone create their own tags for documents (both their own and everyone else’s) and share them? Would this make searches easier for everyone? This self-organizing tagging structure is called a folksonomy, made popular by a Web site called del.icio.us. It follows the “Wisdom of Crowds” philosophy (made popular by the book of the same name) that a crowd is smarter than one person alone. This subject is discussed in more detail in Chapter 6, Business Metadata Capture. 4.6 Summary Bad communications have dire consequences, ranging from major disasters that cause loss of life or billions of dollars to bad business decisions.


pages: 344 words: 104,077

Superminds: The Surprising Power of People and Computers Thinking Together by Thomas W. Malone

Abraham Maslow, agricultural Revolution, Airbnb, Albert Einstein, Alvin Toffler, Amazon Mechanical Turk, Apple's 1984 Super Bowl advert, Asperger Syndrome, Baxter: Rethink Robotics, bitcoin, blockchain, Boeing 747, business process, call centre, carbon tax, clean water, Computing Machinery and Intelligence, creative destruction, crowdsourcing, data science, deep learning, Donald Trump, Douglas Engelbart, Douglas Engelbart, driverless car, drone strike, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, experimental economics, Exxon Valdez, Ford Model T, future of work, Future Shock, Galaxy Zoo, Garrett Hardin, gig economy, happiness index / gross national happiness, independent contractor, industrial robot, Internet of things, invention of the telegraph, inventory management, invisible hand, Jeff Rulifson, jimmy wales, job automation, John Markoff, Joi Ito, Joseph Schumpeter, Kenneth Arrow, knowledge worker, longitudinal study, Lyft, machine translation, Marshall McLuhan, Nick Bostrom, Occupy movement, Pareto efficiency, pattern recognition, prediction markets, price mechanism, radical decentralization, Ray Kurzweil, Rodney Brooks, Ronald Coase, search costs, Second Machine Age, self-driving car, Silicon Valley, slashdot, social intelligence, Stephen Hawking, Steve Jobs, Steven Pinker, Stewart Brand, technological singularity, The Nature of the Firm, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Tim Cook: Apple, Tragedy of the Commons, transaction costs, Travis Kalanick, Uber for X, uber lyft, Vernor Vinge, Vilfredo Pareto, Watson beat the top human players on Jeopardy!

By cleverly motivating everyone to not only look for balloons but also recruit others to the cause, this approach rapidly recruited a vast army of searchers. Together this group’s brute-force searching solved the problem far faster than almost anyone expected. I can’t imagine that this method would have been possible without the fast, cheap communication enabled by modern information technologies. THE WISDOM-OF-CROWDS EFFECT In his book The Wisdom of Crowds, James Surowiecki popularized another reason why large groups can be smarter than small ones.9 He tells the story of the English statistician Sir Francis Galton, who, at a county fair in England in 1906, analyzed the results of a contest to guess the weight of an ox. It turned out that the average of all the guesses (1,197 pounds) was a remarkably accurate estimate of the actual weight (1,198 pounds).

The basic principle behind why this works is that when many people with no particular bias guess the answer, they should be equally likely to make errors on the high side and on the low side of the correct answer. When you average their answers, the errors should cancel each other out, leaving an accurate estimate. Usually, the larger the crowd, the more accurate the estimate.10 Limitations of the Wisdom of Crowds Even though many people know about the wisdom-of-crowds effect, it turns out that this effect is more complicated than many readers of Surowiecki’s book realize. First, the average is probably not the right statistic to use. I’ve been doing a version of this experiment in my MIT classes for years, asking students to guess how many jelly beans are in a jar.

Even though Surowiecki implied otherwise, Galton himself used the median, not the average, and a number of other researchers have similarly found that the median is a better way of combining a group’s guesses than the average.11 As Surowiecki notes, another very important condition for the success of the wisdom-of-crowds effect is that the guesses need to be independent of each other. If people are influenced by one another’s guesses, this introduces biases that make the whole process less effective. For instance, in one compelling experiment, when group members saw information about one another’s guesses, their guesses moved closer together, and they became more confident that their guesses were right… but their guesses actually became less accurate.12 In other words, when members of the group shared information, they became less diverse and less effective at predicting the correct answer.


Infotopia: How Many Minds Produce Knowledge by Cass R. Sunstein

affirmative action, Andrei Shleifer, availability heuristic, behavioural economics, Build a better mousetrap, c2.com, Cass Sunstein, cognitive bias, cuban missile crisis, Daniel Kahneman / Amos Tversky, Edward Glaeser, en.wikipedia.org, feminist movement, framing effect, Free Software Foundation, hindsight bias, information asymmetry, Isaac Newton, Jean Tirole, jimmy wales, market bubble, market design, minimum wage unemployment, prediction markets, profit motive, rent control, Richard Stallman, Richard Thaler, Robert Shiller, Ronald Reagan, Savings and loan crisis, slashdot, stem cell, systematic bias, Ted Sorensen, the Cathedral and the Bazaar, The Wisdom of Crowds, winner-take-all economy

See Sergey Brin and Lawrence Page, “The Anatomy of a LargeScale Hypertextual Web Search Engine,” Computer Networks & ISDN System 30 (1998): 107–10, available at http://dbpubs .stanford.edu:8090/pub/1998–8. 6. Lorge et al., “A Survey of Studies Contrasting the Quality of Group Performance and Individual Performance, 1920–1957,” 344. 7. See Surowiecki, The Wisdom of Crowds, 5 (discussing jar experiment). Notes to Pages 17–24 / 233 8. Richard S. Bruce, “Group Judgments in the Field of Lifted Weights and Visual Discrimination,” Journal of Psychology 1 (1936): 117–21. 9. Surowiecki, The Wisdom of Crowds, xi–xiii. 10. Some affirmative evidence can be found in J. Scott Armstrong, “Combining Forecasts,” in Principles of Forecasting, ed. J. Scott Armstrong (Boston: Kluwer Academic, 2001), 419–20, 427, 433–35. 11.

Is a flu pandemic going to strike Europe? Will an endangered species recover? A great deal of evidence suggests that under certain conditions, a promising way to answer such questions is this: Ask a large number of people and take the average answer. As emphasized by James Surowiecki in his engaging and illuminating The Wisdom of Crowds, large groups can, in a sense, be wiser than experts.1 When the relevant conditions are met, the average answer, which we might describe as the group’s “statistical answer,” is often accurate, where accuracy is measured by reference to objectively demonstrable facts. Here’s one example: In 2004, members of the Society for American Baseball Research were asked to predict the winners of the baseball playoffs.2 Remarkably, strong majorities of the 413 respondents correctly predicted all of the first-round winners: New York, Boston, Houston, and / 21 St.

Friedrich Hayek, Law, Legislation, and Liberty, vol. 1: Rules and Order (Chicago: University of Chicago Press, 1973), 13. 21. See Russell Hardin, “The Crippled Epistemology of Extremism,” in Political Rationality and Extremism, ed. Albert Breton et al. (Cambridge, UK: Cambridge University Press, 2002), 3, 16. Chapter 1 / 1. See James Surowiecki, The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies, and Nations (New York: Doubleday, 2004). 2. John Zajc, “This Week in SABR” (Society for American Baseball Research, Cleveland, Ohio), Oct. 9, 2004 (Results of playoff prediction survey), available at http://www.sabr.org/ sabr.cfm?


pages: 478 words: 126,416

Other People's Money: Masters of the Universe or Servants of the People? by John Kay

Affordable Care Act / Obamacare, Alan Greenspan, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Monday: stock market crash in 1987, Black Swan, Bonfire of the Vanities, bonus culture, book value, Bretton Woods, buy and hold, call centre, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, cognitive dissonance, Cornelius Vanderbilt, corporate governance, Credit Default Swap, cross-subsidies, currency risk, dematerialisation, disinformation, disruptive innovation, diversification, diversified portfolio, Edward Lloyd's coffeehouse, Elon Musk, Eugene Fama: efficient market hypothesis, eurozone crisis, financial engineering, financial innovation, financial intermediation, financial thriller, fixed income, Flash crash, forward guidance, Fractional reserve banking, full employment, George Akerlof, German hyperinflation, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Greenspan put, Growth in a Time of Debt, Ida Tarbell, income inequality, index fund, inflation targeting, information asymmetry, intangible asset, interest rate derivative, interest rate swap, invention of the wheel, Irish property bubble, Isaac Newton, it is difficult to get a man to understand something, when his salary depends on his not understanding it, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Jim Simons, John Meriwether, junk bonds, light touch regulation, London Whale, Long Term Capital Management, loose coupling, low cost airline, M-Pesa, market design, Mary Meeker, megaproject, Michael Milken, millennium bug, mittelstand, Money creation, money market fund, moral hazard, mortgage debt, Myron Scholes, NetJets, new economy, Nick Leeson, Northern Rock, obamacare, Occupy movement, offshore financial centre, oil shock, passive investing, Paul Samuelson, Paul Volcker talking about ATMs, peer-to-peer lending, performance metric, Peter Thiel, Piper Alpha, Ponzi scheme, price mechanism, proprietary trading, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, railway mania, Ralph Waldo Emerson, random walk, reality distortion field, regulatory arbitrage, Renaissance Technologies, rent control, risk free rate, risk tolerance, road to serfdom, Robert Shiller, Ronald Reagan, Schrödinger's Cat, seminal paper, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, sovereign wealth fund, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, Steve Wozniak, The Great Moderation, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tobin tax, too big to fail, transaction costs, tulip mania, Upton Sinclair, Vanguard fund, vertical integration, Washington Consensus, We are the 99%, Yom Kippur War

PART II: THE FUNCTIONS OF FINANCE 5 Capital allocation Physical assets Housing Property and infrastructure Large companies Financing small and medium-size enterprises 6 The deposit channel Household wealth The payment system The activities of the deposit channel 7 The investment channel Stewardship A bias to action The role of the asset manager PART III: POLICY 8 Regulation The origins of financial regulation The Basel agreements Securities regulation The regulation industry What went wrong 9 Economic policy Maestro Financial markets and economic policy Pensions and inter-generational equity Consumer protection The British dilemma 10 Reform Principles of reform Robust systems and complex structures Other people’s money The reform of structure Personal responsibility 11 The future of finance Epilogue; The emperor’s guard’s new clothes Acknowledgements Notes Bibliography Index PROLOGUE The parable of the ox1 In 1906 the great statistician Francis Galton observed a competition to guess the weight of an ox at a country fair. Eight hundred people entered. Galton, being the kind of man he was, ran statistical tests on the numbers. He discovered that the average guess was extremely close to the weight of the ox. This story was told by James Surowiecki, in his entertaining book The Wisdom of Crowds.2 Not many people know the events that followed. A few years later, the scales seemed to become less and less reliable. Repairs would be expensive, but the fair organiser had a brilliant idea. Since attendees were so good at guessing the weight of an ox, it was unnecessary to repair the scales.

Once weight-guessing competitions became the rage, some participants tried to cheat. They even tried to get privileged information from the farmer who had bred the ox. But there was fear that, if some people had an edge, others would be reluctant to enter the weight-guessing competition. With few entrants, you could not rely on the wisdom of crowds. The process of weight discovery would be damaged. So strict regulatory rules were introduced. The farmer was asked to prepare three-monthly bulletins on the development of his ox. These bulletins were posted on the door of the market for everyone to read. If the farmer gave his friends any other information about the beast, that information was also to be posted on the market door.

We do not fly an aeroplane by consensus of the views of the passengers: instead we put our trust in a highly trained, skilled and well-informed pilot. The failure of the mortgage market is only the most conspicuous example of the consequences of replacing knowledgeable intermediation in favour of the supposed ‘wisdom of crowds’.6 The aggregation of inconsequential information across large numbers of people amounts not to the ‘wisdom of crowds’ but to not very much at all: the more so since the opinions that are aggregated are not independently formed. The crowds that clamoured for the crucifixion of Jesus, watched the tumbrels roll to the guillotine and stood to attention at Nuremberg rallies were not wise, but baying mobs reinforcing the ignorant opinions of their neighbours.


pages: 313 words: 91,098

The Knowledge Illusion by Steven Sloman

Affordable Care Act / Obamacare, Air France Flight 447, attribution theory, bitcoin, Black Swan, Cass Sunstein, combinatorial explosion, computer age, Computing Machinery and Intelligence, CRISPR, crowdsourcing, Dmitri Mendeleev, driverless car, Dunning–Kruger effect, Elon Musk, Ethereum, Flynn Effect, Great Leap Forward, Gregor Mendel, Hernando de Soto, Higgs boson, hindsight bias, hive mind, indoor plumbing, Isaac Newton, John von Neumann, libertarian paternalism, Mahatma Gandhi, Mark Zuckerberg, meta-analysis, Nick Bostrom, obamacare, Peoples Temple, prediction markets, randomized controlled trial, Ray Kurzweil, Richard Feynman, Richard Thaler, Rodney Brooks, Rosa Parks, seminal paper, single-payer health, speech recognition, stem cell, Stephen Hawking, Steve Jobs, technological singularity, The Coming Technological Singularity, The Wisdom of Crowds, Vernor Vinge, web application, Whole Earth Review, Y Combinator

De Langhe, P. M. Fernbach, and D. R. Lichtenstein (2015). “Navigating by the Stars: Investigating the Actual and Perceived Validity of Online User Ratings.” Journal of Consumer Research 42: 817–830. The Wisdom of Crowds: F. Galton (1907). Vox Populi (the Wisdom of Crowds). First published in Nature 75(1949): 450–451. The topic is discussed in detail in J. Surowiecki (2005). The Wisdom of Crowds. New York: Doubleday Anchor. within 1 percent of the ox’s true weight of 1,198 pounds: Despite frequent reports saying otherwise, he did not find that the mean weight was within 1 pound of the ox’s true weight.

Their ratings do not correlate very well with the evaluations of true experts and are too high for beloved brands and high-priced items. Many consumers just do not have the expertise to accurately assess the quality of technical products like digital cameras and kitchen appliances. But crowdsourcing can be effective. This was first revealed by Francis Galton in 1907 in a paper entitled Vox Populi (The Wisdom of Crowds). He reports on a contest held at a farmers’ fair in Plymouth, England, to guess the weight of a fat ox. The contest was open to everyone willing to pay a small fee with the hope of making a guess close enough to the ox’s true weight to win a prize. Guesses came from experts like butchers and farmers as well as the general public.

There are a lot of reasons to be critical of ballot measures voted on directly by citizenry. Our main concern is that such measures neglect the knowledge illusion. Individual citizens rarely know enough to make an informed decision about complex social policy even if they think they do. Giving a vote to every citizen can swamp the contribution of expertise to good judgment that the wisdom of crowds relies on. Reducing taxes sounds good in the abstract, but consider California’s Proposition 13. This ballot measure, passed by a direct vote of the people of California in 1978, was designed to limit taxes on residential, business, and agricultural property, reducing them from an average of 3 percent to a cap of 1 percent of a property’s sale value.


pages: 400 words: 94,847

Reinventing Discovery: The New Era of Networked Science by Michael Nielsen

Albert Einstein, augmented reality, barriers to entry, bioinformatics, Cass Sunstein, Climategate, Climatic Research Unit, conceptual framework, dark matter, discovery of DNA, Donald Knuth, double helix, Douglas Engelbart, Douglas Engelbart, Easter island, en.wikipedia.org, Erik Brynjolfsson, fault tolerance, Fellow of the Royal Society, Firefox, Free Software Foundation, Freestyle chess, Galaxy Zoo, Higgs boson, Internet Archive, invisible hand, Jane Jacobs, Jaron Lanier, Johannes Kepler, Kevin Kelly, Large Hadron Collider, machine readable, machine translation, Magellanic Cloud, means of production, medical residency, Nicholas Carr, P = NP, P vs NP, publish or perish, Richard Feynman, Richard Stallman, selection bias, semantic web, Silicon Valley, Silicon Valley startup, Simon Singh, Skype, slashdot, social intelligence, social web, statistical model, Stephen Hawking, Stewart Brand, subscription business, tacit knowledge, Ted Nelson, the Cathedral and the Bazaar, The Death and Life of Great American Cities, The Nature of the Firm, The Wisdom of Crowds, University of East Anglia, Vannevar Bush, Vernor Vinge, Wayback Machine, Yochai Benkler

Furthermore, we don’t yet have a good understanding of how the human brain works, so the metaphor is in any case of limited use at best. If we’re going to understand how to amplify collective intelligence, we need to look beyond the metaphor of the collective brain. Many books and magazine articles have been written about collective intelligence. Perhaps the best-known example of this work is James Surowiecki’s 2004 book The Wisdom of Crowds, which explains how large groups of people can sometimes perform surprisingly well at problem solving. Surowiecki opens his book with a striking story about the scientist Francis Galton. In 1906, Galton was attending an English country fair, and among the fair’s attractions was a weight-judging contest, where people competed to guess the weight of an ox.

Galton expected that most of the competitors would be far off in their estimates, and was surprised to learn that the average of all the competitors’ guesses (1,197 pounds) was just one pound short of the correct weight of 1,198 pounds. In other words, collectively, if one averaged the guesses, the crowd at the fair guessed the weight almost perfectly. Surowiecki’s book goes on to discuss many other ways we can combine our collective wisdom to surprisingly good effect. This book goes beyond The Wisdom of Crowds and similar works in two ways. First, our goal is to understand how online tools can actively amplify collective intelligence. That is, we’re not just interested in collective intelligence, per se, but in how to design tools that dramatically increase collective intelligence. Second, we’re not just discussing everyday problems like estimating the weight of an ox.

The projects we’ve discussed have overcome these and similar problems: some have succeeded with flying colors (the Polymath Project), while others just barely succeeded (World Team deliberations sometimes teetered on the edge of breakdown because of lack of civility). Similar problems also afflict offline groups, and much has been written about the problems and how to overcome them—including books such as James Surowiecki’s The Wisdom of Crowds, Cass Sunstein’s Infotopia, and many other books about business and organizational behavior. While these practical problems are important, they can often be solved with good process. But no matter how good the process, there remains a fundamental dividing line: whether a shared praxis is available.


pages: 502 words: 107,657

Predictive Analytics: The Power to Predict Who Will Click, Buy, Lie, or Die by Eric Siegel

Alan Greenspan, Albert Einstein, algorithmic trading, Amazon Mechanical Turk, Apollo 11, Apple's 1984 Super Bowl advert, backtesting, Black Swan, book scanning, bounce rate, business intelligence, business process, butter production in bangladesh, call centre, Charles Lindbergh, commoditize, computer age, conceptual framework, correlation does not imply causation, crowdsourcing, dark matter, data is the new oil, data science, driverless car, en.wikipedia.org, Erik Brynjolfsson, Everything should be made as simple as possible, experimental subject, Google Glasses, happiness index / gross national happiness, information security, job satisfaction, Johann Wolfgang von Goethe, lifelogging, machine readable, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, mass immigration, Moneyball by Michael Lewis explains big data, Nate Silver, natural language processing, Netflix Prize, Network effects, Norbert Wiener, personalized medicine, placebo effect, prediction markets, Ray Kurzweil, recommendation engine, risk-adjusted returns, Ronald Coase, Search for Extraterrestrial Intelligence, self-driving car, sentiment analysis, Shai Danziger, software as a service, SpaceShipOne, speech recognition, statistical model, Steven Levy, supply chain finance, text mining, the scientific method, The Signal and the Noise by Nate Silver, The Wisdom of Crowds, Thomas Bayes, Thomas Davenport, Turing test, Watson beat the top human players on Jeopardy!, X Prize, Yogi Berra, zero-sum game

The predictive capacity of the mass mood expressed by bloggers at large to foresee stock market behavior, as covered in Chapter 3 (in fact, related work comes from MIT’s aptly named Center for Collective Intelligence). Human minds aren’t the only things that can be effectively merged together. It turns out the aggregate effect emerging from a group extends also to nonhuman crowds—of predictive models. The Wisdom of Crowds . . . of Models The “wisdom of crowds” concept motivates ensembles because it illustrates a key principle of ensembling: Predictions can be improved by averaging the predictions of many. —Dean Abbott, Abbott Analytics Like a crowd of people, an ensemble of predictive models benefits from the same “collective intelligence” effect.5 Each model has its strengths and weaknesses.

The Big Bad Wolf The End of the Rainbow Prediction Juice Far Out, Bizarre, and Surprising Insights Correlation Does Not Imply Causation The Cause and Effect of Emotions A Picture Is Worth a Thousand Diamonds Validating Feelings and Feeling Validated Serendipity and Innovation Investment Advice from the Blogosphere Money Makes the World Go ‘Round Putting It All Together Chapter 4: The Machine That Learns (modeling) Boy Meets Bank Bank Faces Risk Prediction Battles Risk Risky Business The Learning Machine Building the Learning Machine Learning from Bad Experiences How Machine Learning Works Decision Trees Grow on You Computer, Program Thyself Learn Baby Learn Bigger Is Better Overlearning: Assuming Too Much The Conundrum of Induction The Art and Science of Machine Learning Feeling Validated: Test Data Carving Out a Work of Art Putting Decision Trees to Work for Chase Money Grows on Trees The Recession—Why Microscopes Can’t Detect Asteroid Collisions After Math Chapter 5: The Ensemble Effect (ensembles) Casual Rocket Scientists Dark Horses Mindsourced: Wealth in Diversity Crowdsourcing Gone Wild Your Adversary Is Your Amigo United Nations Meta-Learning A Big Fish at the Big Finish Collective Intelligence The Wisdom of Crowds . . . of Models A Bag of Models Ensemble Models in Action The Generalization Paradox: More Is Less The Sky’s the Limit Chapter 6: Watson and the Jeopardy! Challenge (question answering) Text Analytics Our Mother Tongue’s Trials and Tribulations Once You Understand the Question, Answer It The Ultimate Knowledge Source Artificial Impossibility Learning to Answer Questions Walk Like a Man, Talk Like a Man A Better Mousetrap The Answering Machine Moneyballing Jeopardy!

The winning team received the cash and the other team received nothing. Netflix CEO Reed Hastings reflected, “That 20 minutes was worth a million dollars.” Collective Intelligence With most things, the average is mediocrity. With decision making, it’s often excellence. — James Surowiecki, The Wisdom of Crowds Even competitions much simpler than a data mining contest can tap the wisdom held by a crowd. The magic of collective intelligence was lightheartedly demonstrated in 2012 at the Predictive Analytics World (PAW) conference. Charged with drawing attention to his analytics company on the event’s exposition floor, Gary Panchoo held a money-guessing contest.


pages: 354 words: 105,322

The Road to Ruin: The Global Elites' Secret Plan for the Next Financial Crisis by James Rickards

"World Economic Forum" Davos, Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, asset allocation, asset-backed security, bank run, banking crisis, barriers to entry, Bayesian statistics, Bear Stearns, behavioural economics, Ben Bernanke: helicopter money, Benoit Mandelbrot, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, bitcoin, Black Monday: stock market crash in 1987, Black Swan, blockchain, Boeing 747, Bonfire of the Vanities, Bretton Woods, Brexit referendum, British Empire, business cycle, butterfly effect, buy and hold, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, cellular automata, cognitive bias, cognitive dissonance, complexity theory, Corn Laws, corporate governance, creative destruction, Credit Default Swap, cuban missile crisis, currency manipulation / currency intervention, currency peg, currency risk, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, debt deflation, Deng Xiaoping, disintermediation, distributed ledger, diversification, diversified portfolio, driverless car, Edward Lorenz: Chaos theory, Eugene Fama: efficient market hypothesis, failed state, Fall of the Berlin Wall, fiat currency, financial repression, fixed income, Flash crash, floating exchange rates, forward guidance, Fractional reserve banking, G4S, George Akerlof, Glass-Steagall Act, global macro, global reserve currency, high net worth, Hyman Minsky, income inequality, information asymmetry, interest rate swap, Isaac Newton, jitney, John Meriwether, John von Neumann, Joseph Schumpeter, junk bonds, Kenneth Rogoff, labor-force participation, large denomination, liquidity trap, Long Term Capital Management, low interest rates, machine readable, mandelbrot fractal, margin call, market bubble, Mexican peso crisis / tequila crisis, Minsky moment, Money creation, money market fund, mutually assured destruction, Myron Scholes, Naomi Klein, nuclear winter, obamacare, offshore financial centre, operational security, Paul Samuelson, Peace of Westphalia, Phillips curve, Pierre-Simon Laplace, plutocrats, prediction markets, price anchoring, price stability, proprietary trading, public intellectual, quantitative easing, RAND corporation, random walk, reserve currency, RFID, risk free rate, risk-adjusted returns, Robert Solow, Ronald Reagan, Savings and loan crisis, Silicon Valley, sovereign wealth fund, special drawing rights, stock buybacks, stocks for the long run, tech billionaire, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Bayes, Thomas Kuhn: the structure of scientific revolutions, too big to fail, transfer pricing, value at risk, Washington Consensus, We are all Keynesians now, Westphalian system

However, betting markets run by Ladbrokes and Betfair showed a 70 percent probability that Remain would win. A certain type of foreign exchange market participant, the young London City banker who makes markets for his firm and clients, considered betting odds a distillation of the “wisdom of crowds” and priced sterling to reflect that ostensible wisdom. The wisdom of crowds concept was popularized in a 2004 book by that title written by James Surowiecki. The book included an overview of published behavioral research on the subject. The classic example involved guessing the number of jellybeans in a large jar. In a typical experiment, an average of mere guesses by a large number of everyday observers proved more accurate than the estimate of a single expert who might try to calculate the jar’s volume divided by the estimated volume of one jellybean with allowance for the irregular space between beans.

One prominent foreign exchange market participant: Peter Spence, “Swiss Franc Surges After Scrapping Euro Ceiling,” The Telegraph, January 15, 2015, accessed August 9, 2016, www.telegraph.co.uk/finance/currency/11347218/Swiss-franc-surges-after-scrapping-euro-peg.html. The wisdom of crowds concept: See James Surowiecki, The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economics, Societies, and Nations (New York: Anchor Books, 2005). This move was followed by an IMF study: “Staff Note for the G20: The Role of the SDR—Initial Considerations,” International Monetary Fund, July 15, 2016, accessed August 9, 2016, www.imf.org/external/np/pp/eng/2016/072416.pdf.

In a typical experiment, an average of mere guesses by a large number of everyday observers proved more accurate than the estimate of a single expert who might try to calculate the jar’s volume divided by the estimated volume of one jellybean with allowance for the irregular space between beans. In the crowd’s estimate, extreme guesses (“one” or “a million”) cancel out and the average of the remaining guesses is quite close to the actual number. Hence, the wisdom of crowds. Based on a naïve understanding of this science, the City bankers decided the everyman nature of betting markets produces a better forecast than the “expert” pollsters. Flaws in the London bankers’ logic are legion. Accuracy of betting odds in predicting an election is only as good as the correlation of views between the betting pool and the voting pool.


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Googled: The End of the World as We Know It by Ken Auletta

"World Economic Forum" Davos, 23andMe, AltaVista, An Inconvenient Truth, Andy Rubin, Anne Wojcicki, AOL-Time Warner, Apple's 1984 Super Bowl advert, Ben Horowitz, bioinformatics, Burning Man, carbon footprint, citizen journalism, Clayton Christensen, cloud computing, Colonization of Mars, commoditize, company town, corporate social responsibility, creative destruction, death of newspapers, digital rights, disintermediation, don't be evil, facts on the ground, Firefox, Frank Gehry, Google Earth, hypertext link, Innovator's Dilemma, Internet Archive, invention of the telephone, Jeff Bezos, jimmy wales, John Markoff, Kevin Kelly, knowledge worker, Larry Ellison, Long Term Capital Management, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, Mary Meeker, Menlo Park, Network effects, new economy, Nicholas Carr, PageRank, Paul Buchheit, Peter Thiel, Ralph Waldo Emerson, Richard Feynman, Sand Hill Road, Saturday Night Live, semantic web, sharing economy, Sheryl Sandberg, Silicon Valley, Skype, slashdot, social graph, spectrum auction, stealth mode startup, Stephen Hawking, Steve Ballmer, Steve Jobs, strikebreaker, Susan Wojcicki, systems thinking, telemarketer, the Cathedral and the Bazaar, the long tail, the scientific method, The Wisdom of Crowds, Tipper Gore, Upton Sinclair, vertical integration, X Prize, yield management, zero-sum game

The top salary of $450,000 was paid equally to the other members of the executive committee, who in most cases received bonues equal to 150 percent of their salary. Most employees are invited to share the riches. Google projected that stock option grants to employees in 2008 would total $1.1 billion. These grants confer millionaire status on many Googlers. Google’s approach to users is also egalitarian, from its reliance on “the wisdom of crowds” approach to search results to its demonstrated faith in “open source” systems. It is a close-knit culture. Google is not egalitarian about sharing information with outsiders. Ask just about any Googler basic questions—How many searches does Google perform each day? How many of its employees are non-Americans?

Larry Page brilliantly conceived search, and Sergey Brin’s math skills were vital to its success. But Google also succeeded because it forged teams of engineers who were not territorial, who formed a network, communicating and sharing ideas, constantly trying them out in beta tests among users, relying on “the wisdom of crowds” to improve them. Building communities of engineers and hackers and users was the ethos they shared. They believed it was virtuous to share, for it embraced the construct framed by Eric Steven Raymond in a paper originally presented at a conference of Linux developers in 1997, “The Cathedral and the Bazaar.”

More than a few newspapers tried to make the same deal and were rebuffed, said a senior executive at Dow Jones, parent company of the Wall Street journal’s Digital Network. “If they’re really about the user, they should want to say, ‘Some sources are better than others.’ We’ve had many conversations with Google. The bottom line from their perspective is that they are not interested. They are about algorithms and links and ‘the wisdom of crowds.’ But is that really best for the user?” And since the journal charges for its online edition and is behind a firewall, Google cannot offer full links to journal stories as they do with other newspapers. Amid declining sales, the anxiety of newspapers was inflamed. It was not difficult to incite newspaper owners.


Evil Genes: Why Rome Fell, Hitler Rose, Enron Failed, and My Sister Stole My Mother's Boyfriend by Barbara Oakley Phd

agricultural Revolution, Alfred Russel Wallace, Barry Marshall: ulcers, cognitive dissonance, conceptual framework, corporate governance, dark triade / dark tetrad, Deng Xiaoping, disinformation, double helix, Great Leap Forward, Gregor Mendel, impulse control, Mahatma Gandhi, meta-analysis, Milgram experiment, mirror neurons, Mustafa Suleyman, Norbert Wiener, phenotype, Ponzi scheme, prisoner's dilemma, Richard Feynman, rolodex, Ronald Reagan, seminal paper, Silicon Valley, Stanford prison experiment, Steven Pinker, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, twin studies, union organizing, Y2K

Family upbringing, religion, political persuasion, educational background, work experience—all help create the different framing lenses people use.6 Practiced expertise with a musical instrument, for example, can change the structure of the musician's primary motor cortex; London's experienced taxi drivers develop enlarged back ends of their hippocampi as a result of the intricate mental map of the city that they develop and store.7 James Surowiecki's The Wisdom of Crowds drives home his counterintuitive thesis that multiple viewpoints from individuals with a wide range of backgrounds, rather than the restricted viewpoints of experts or specialists, are crucial in reaching informed decisions on complex topics. Such successful problem solving almost certainly reflects the value of using a wide variety of framing lenses.

But if we socialize only with members of our own particular religious persuasion; if we work in an environment with only one-sided political input; if we read only Web sites or other news sources by writers who echo our views, then we strongly reinforce the emotional, rather than logical, basis for our beliefs. After all—if “everyone” we know believes what we believe, we find an emotional reinforcement that helps close off consideration of other perspectives. (So much for the wisdom of crowds.) Aren't there times when we as citizens should respond with healthy emotions, to fight for what we believe in, especially when we feel policies are causing people actual harm? Of course. But simply looking at the research results, one must conclude that people's first emotional responses about what's wrong, who is to blame, or how to proceed, particularly in relation to complex issues, must always—always—be considered suspect.20 There is no simple algorithm for teasing rationality from emotion.

By looking at Mao's own thoughts as he described them in his commentaries, it's clear that Mao—that most Machiavellian of men—would have answered the question “One should take action only when sure it is morally right,” for example, with the seemingly low-Mach “strongly agree.”90 Mao's commentaries clearly stated his feeling that his own moral codes were the most valuable. Given his profound narcissism, we can reasonably assume Mao felt morally justified in doing whatever he wanted. Remember the “wisdom of crowds” and the value of using different framing lenses to come to the optimal solution to complex problems? By stifling dissent and ensuring all eyes were turned only to him for all decisions, Mao effectively made a hundred-million-fold cut in the effectiveness of planning and governing in revolutionary China.


pages: 1,535 words: 337,071

Networks, Crowds, and Markets: Reasoning About a Highly Connected World by David Easley, Jon Kleinberg

Albert Einstein, AltaVista, AOL-Time Warner, Apollo 13, classic study, clean water, conceptual framework, Daniel Kahneman / Amos Tversky, Douglas Hofstadter, Dutch auction, Erdős number, experimental subject, first-price auction, fudge factor, Garrett Hardin, George Akerlof, Gerard Salton, Gerard Salton, Gödel, Escher, Bach, incomplete markets, information asymmetry, information retrieval, John Nash: game theory, Kenneth Arrow, longitudinal study, market clearing, market microstructure, moral hazard, Nash equilibrium, Network effects, Pareto efficiency, Paul Erdős, planetary scale, power law, prediction markets, price anchoring, price mechanism, prisoner's dilemma, random walk, recommendation engine, Richard Thaler, Ronald Coase, sealed-bid auction, search engine result page, second-price auction, second-price sealed-bid, seminal paper, Simon Singh, slashdot, social contagion, social web, Steve Jobs, Steve Jurvetson, stochastic process, Ted Nelson, the long tail, The Market for Lemons, the strength of weak ties, The Wisdom of Crowds, trade route, Tragedy of the Commons, transaction costs, two and twenty, ultimatum game, Vannevar Bush, Vickrey auction, Vilfredo Pareto, Yogi Berra, zero-sum game

More generally, how much influence a bettor’s beliefs have on the state price depends on how much of the aggregate wealth is controlled by that bettor. 22.3. AGGREGATE BELIEFS AND THE “WISDOM OF CROWDS” 713 So it really does make sense to think of the state prices as the market’s averaging of individual beliefs — or, in the more typical phrasing, they can be interpreted as the market’s beliefs. For our horse-race market (with the logarithmic utility function) this market probability is the weighted average of the investors’ beliefs, with each investor’s weight determined by his share of the wealth.3 The Relationship to the “Wisdom of Crowds.” What does this analysis say about the intuition popularized by recent books such as James Surowiecki’s The Wisdom of Crowds [377]?

. . . . . . . . . . . . . . . . 299 10.6 Advanced Material: A Proof of the Matching Theorem . . . . . . . . . . . . 300 10.7 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310 11 Network Models of Markets with Intermediaries 319 11.1 Price-Setting in Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319 11.2 A Model of Trade on Networks . . . . . . . . . . . . . . . . . . . . . . . . . 323 11.3 Equilibria in Trading Networks . . . . . . . . . . . . . . . . . . . . . . . . . 330 11.4 Further Equilibrium Phenomena: Auctions and Ripple Effects . . . . . . . . 334 11.5 Social Welfare in Trading Networks . . . . . . . . . . . . . . . . . . . . . . . 338 11.6 Trader Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339 11.7 Reflections on Trade with Intermediaries . . . . . . . . . . . . . . . . . . . . 342 11.8 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342 12 Bargaining and Power in Networks 347 12.1 Power in Social Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347 12.2 Experimental Studies of Power and Exchange . . . . . . . . . . . . . . . . . 350 12.3 Results of Network Exchange Experiments . . . . . . . . . . . . . . . . . . . 352 12.4 A Connection to Buyer-Seller Networks . . . . . . . . . . . . . . . . . . . . . 356 12.5 Modeling Two-Person Interaction: The Nash Bargaining Solution . . . . . . 357 12.6 Modeling Two-Person Interaction: The Ultimatum Game . . . . . . . . . . . 360 12.7 Modeling Network Exchange: Stable Outcomes . . . . . . . . . . . . . . . . 362 12.8 Modeling Network Exchange: Balanced Outcomes . . . . . . . . . . . . . . . 366 12.9 Advanced Material: A Game-Theoretic Approach to Bargaining . . . . . . . 369 12.10Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376 IV Information Networks and the World Wide Web 381 13 The Structure of the Web 383 13.1 The World Wide Web . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384 13.2 Information Networks, Hypertext, and Associative Memory . . . . . . . . . . 386 13.3 The Web as a Directed Graph . . . . . . . . . . . . . . . . . . . . . . . . . . 394 13.4 The Bow-Tie Structure of the Web . . . . . . . . . . . . . . . . . . . . . . . 397 13.5 The Emergence of Web 2.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400 13.6 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403 6 CONTENTS 14 Link Analysis and Web Search 405 14.1 Searching the Web: The Problem of Ranking . . . . . . . . . . . . . . . . . . 405 14.2 Link Analysis using Hubs and Authorities . . . . . . . . . . . . . . . . . . . 407 14.3 PageRank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414 14.4 Applying Link Analysis in Modern Web Search . . . . . . . . . . . . . . . . 420 14.5 Applications beyond the Web . . . . . . . . . . . . . . . . . . . . . . . . . . 423 14.6 Advanced Material: Spectral Analysis, Random Walks, and Web Search . . . 425 14.7 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437 15 Sponsored Search Markets 445 15.1 Advertising Tied to Search Behavior . . . . . . . . . . . . . . . . . . . . . . 445 15.2 Advertising as a Matching Market . . . . . . . . . . . . . . . . . . . . . . . . 448 15.3 Encouraging Truthful Bidding in Matching Markets: The VCG Principle . . 452 15.4 Analyzing the VCG Procedure: Truth-Telling as a Dominant Strategy . . . . 457 15.5 The Generalized Second Price Auction . . . . . . . . . . . . . . . . . . . . . 460 15.6 Equilibria of the Generalized Second Price Auction . . . . . . . . . . . . . . 464 15.7 Ad Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 467 15.8 Complex Queries and Interactions Among Keywords . . . . . . . . . . . . . 469 15.9 Advanced Material: VCG Prices and the Market-Clearing Property . . . . . 470 15.10Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486 V Network Dynamics: Population Models 489 16 Information Cascades 491 16.1 Following the Crowd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491 16.2 A Simple Herding Experiment . . . . . . . . . . . . . . . . . . . . . . . . . . 493 16.3 Bayes’ Rule: A Model of Decision-Making Under Uncertainty . . . . . . . . . 497 16.4 Bayes’ Rule in the Herding Experiment . . . . . . . . . . . . . . . . . . . . . 502 16.5 A Simple, General Cascade Model . . . . . . . . . . . . . . . . . . . . . . . . 504 16.6 Sequential Decision-Making and Cascades . . . . . . . . . . . . . . . . . . . 508 16.7 Lessons from Cascades . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511 16.8 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513 17 Network Effects 517 17.1 The Economy Without Network Effects . . . . . . . . . . . . . . . . . . . . . 518 17.2 The Economy with Network Effects . . . . . . . . . . . . . . . . . . . . . . . 522 17.3 Stability, Instability, and Tipping Points . . . . . . . . . . . . . . . . . . . . 525 17.4 A Dynamic View of the Market . . . . . . . . . . . . . . . . . . . . . . . . . 527 17.5 Industries with Network Goods . . . . . . . . . . . . . . . . . . . . . . . . . 534 17.6 Mixing Individual Effects with Population-Level Effects . . . . . . . . . . . . 536 17.7 Advanced Material: Negative Externalities and The El Farol Bar Problem . 541 17.8 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 549 CONTENTS 7 18 Power Laws and Rich-Get-Richer Phenomena 553 18.1 Popularity as a Network Phenomenon . . . . . . . . . . . . . . . . . . . . . . 553 18.2 Power Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 555 18.3 Rich-Get-Richer Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557 18.4 The Unpredictability of Rich-Get-Richer Effects . . . . . . . . . . . . . . . . 559 18.5 The Long Tail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 561 18.6 The Effect of Search Tools and Recommendation Systems . . . . . . . . . . . 564 18.7 Advanced Material: Analysis of Rich-Get-Richer Processes . . . . . . . . . . 565 18.8 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569 VI Network Dynamics: Structural Models 571 19 Cascading Behavior in Networks 573 19.1 Diffusion in Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 573 19.2 Modeling Diffusion through a Network . . . . . . . . . . . . . . . . . . . . . 575 19.3 Cascades and Clusters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 583 19.4 Diffusion, Thresholds, and the Role of Weak Ties . . . . . . . . . . . . . . . 588 19.5 Extensions of the Basic Cascade Model . . . . . . . . . . . . . . . . . . . . . 590 19.6 Knowledge, Thresholds, and Collective Action . . . . . . . . . . . . . . . . . 593 19.7 Advanced Material: The Cascade Capacity . . . . . . . . . . . . . . . . . . . 597 19.8 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613 20 The Small-World Phenomenon 621 20.1 Six Degrees of Separation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 621 20.2 Structure and Randomness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 622 20.3 Decentralized Search . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 626 20.4 Modeling the Process of Decentralized Search . . . . . . . . . . . . . . . . . 629 20.5 Empirical Analysis and Generalized Models . . . . . . . . . . . . . . . . . . 632 20.6 Core-Periphery Structures and Difficulties in Decentralized Search . . . . . . 638 20.7 Advanced Material: Analysis of Decentralized Search . . . . . . . . . . . . . 640 20.8 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 652 21 Epidemics 655 21.1 Diseases and the Networks that Transmit Them . . . . . . . . . . . . . . . . 655 21.2 Branching Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 657 21.3 The SIR Epidemic Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 660 21.4 The SIS Epidemic Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 666 21.5 Synchronization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 669 21.6 Transient Contacts and the Dangers of Concurrency . . . . . . . . . . . . . . 672 21.7 Genealogy, Genetic Inheritance, and Mitochondrial Eve . . . . . . . . . . . . 676 21.8 Advanced Material: Analysis of Branching and Coalescent Processes . . . . . 682 21.9 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 695 8 CONTENTS VII Institutions and Aggregate Behavior 699 22 Markets and Information 701 22.1 Markets with Exogenous Events . . . . . . . . . . . . . . . . . . . . . . . . . 702 22.2 Horse Races, Betting, and Beliefs . . . . . . . . . . . . . . . . . . . . . . . . 704 22.3 Aggregate Beliefs and the “Wisdom of Crowds” . . . . . . . . . . . . . . . . 710 22.4 Prediction Markets and Stock Markets . . . . . . . . . . . . . . . . . . . . . 714 22.5 Markets with Endogenous Events . . . . . . . . . . . . . . . . . . . . . . . . 717 22.6 The Market for Lemons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 719 22.7 Asymmetric Information in Other Markets . . . . . . . . . . . . . . . . . . . 724 22.8 Signaling Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 728 22.9 Quality Uncertainty On-Line: Reputation Systems and Other Mechanisms . 729 22.10Advanced Material: Wealth Dynamics in Markets . . . . . . . . . . . . . . . 732 22.11Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 740 23 Voting 745 23.1 Voting for Group Decision-Making . . . . . . . . . . . . . . . . . . . . . . . 745 23.2 Individual Preferences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 747 23.3 Voting Systems: Majority Rule . . . . . . . . . . . . . . . . . . . . . . . . . 750 23.4 Voting Systems: Positional Voting . . . . . . . . . . . . . . . . . . . . . . . . 755 23.5 Arrow’s Impossibility Theorem . . . . . . . . . . . . . . . . . . . . . . . . . 758 23.6 Single-Peaked Preferences and the Median Voter Theorem . . . . . . . . . . 760 23.7 Voting as a Form of Information Aggregation . . . . . . . . . . . . . . . . . . 766 23.8 Insincere Voting for Information Aggregation . . . . . . . . . . . . . . . . . . 768 23.9 Jury Decisions and the Unanimity Rule . . . . . . . . . . . . . . . . . . . . . 771 23.10Sequential Voting and the Relation to Information Cascades . . . . . . . . . 776 23.11Advanced Material: A Proof of Arrow’s Impossibility Theorem . . . . . . . . 777 23.12Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 782 24 Property Rights 785 24.1 Externalities and the Coase Theorem . . . . . . . . . . . . . . . . . . . . . . 785 24.2 The Tragedy of the Commons . . . . . . . . . . . . . . . . . . . . . . . . . . 790 24.3 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 793 24.4 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 796 Chapter 1 Overview Over the past decade there has been a growing public fascination with the complex “connectedness” of modern society.

A core principle of Web 2.0 is that on-line Web sites and services can become more appealing to users — and in fact, often genuinely more valuable to them — as their audiences grow larger. When and how this process takes place forms a central focus in chapters from the next two parts of the book, particularly Chapters 16, 17, and 19. • “The wisdom of crowds.” The collaborative authoring of an encyclopedia by millions on Wikipedia, the elevation of news content by group evaluation on digg, the fact that photos of breaking news now often appear on Flickr before they do in the mainstream news, and many similar developments highlighted the ways in which the audience of a Web 2.0 site — each contributing specific expertise and sometimes misinformation —can produce a collective artifact of significant value.


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The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated by Gautam Baid

Abraham Maslow, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, Albert Einstein, Alvin Toffler, Andrei Shleifer, asset allocation, Atul Gawande, availability heuristic, backtesting, barriers to entry, beat the dealer, Benoit Mandelbrot, Bernie Madoff, bitcoin, Black Swan, book value, business process, buy and hold, Cal Newport, Cass Sunstein, Checklist Manifesto, Clayton Christensen, cognitive dissonance, collapse of Lehman Brothers, commoditize, corporate governance, correlation does not imply causation, creative destruction, cryptocurrency, Daniel Kahneman / Amos Tversky, deep learning, delayed gratification, deliberate practice, discounted cash flows, disintermediation, disruptive innovation, Dissolution of the Soviet Union, diversification, diversified portfolio, dividend-yielding stocks, do what you love, Dunning–Kruger effect, Edward Thorp, Elon Musk, equity risk premium, Everything should be made as simple as possible, fear index, financial independence, financial innovation, fixed income, follow your passion, framing effect, George Santayana, Hans Rosling, hedonic treadmill, Henry Singleton, hindsight bias, Hyman Minsky, index fund, intangible asset, invention of the wheel, invisible hand, Isaac Newton, it is difficult to get a man to understand something, when his salary depends on his not understanding it, Jeff Bezos, John Bogle, Joseph Schumpeter, junk bonds, Kaizen: continuous improvement, Kickstarter, knowledge economy, Lao Tzu, Long Term Capital Management, loss aversion, Louis Pasteur, low interest rates, Mahatma Gandhi, mandelbrot fractal, margin call, Mark Zuckerberg, Market Wizards by Jack D. Schwager, Masayoshi Son, mental accounting, Milgram experiment, moral hazard, Nate Silver, Network effects, Nicholas Carr, offshore financial centre, oil shock, passive income, passive investing, pattern recognition, Peter Thiel, Ponzi scheme, power law, price anchoring, quantitative trading / quantitative finance, Ralph Waldo Emerson, Ray Kurzweil, Reminiscences of a Stock Operator, reserve currency, Richard Feynman, Richard Thaler, risk free rate, risk-adjusted returns, Robert Shiller, Savings and loan crisis, search costs, shareholder value, six sigma, software as a service, software is eating the world, South Sea Bubble, special economic zone, Stanford marshmallow experiment, Steve Jobs, Steven Levy, Steven Pinker, stocks for the long run, subscription business, sunk-cost fallacy, systems thinking, tail risk, Teledyne, the market place, The Signal and the Noise by Nate Silver, The Wisdom of Crowds, time value of money, transaction costs, tulip mania, Upton Sinclair, Walter Mischel, wealth creators, Yogi Berra, zero-sum game

Knowing when the market is being brilliantly rational and when it is being ludicrously irrational is learned from experience and an extensive study of financial history. The wisdom of crowds aggregation process in the market generates an “accurate” answer by transferring (partial) domain-specific knowledge from individuals to the collective. A popular example of the wisdom of crowds phenomenon is the analysis of a 1906 ox-weighing contest, written by Sir Francis Galton, titled “Vox Populi.”22 Three key tenets of market efficiency pertain to information, and the wisdom of crowds implements those tenets under six conditions. For each of the following, only a sufficient or threshold number of investors, not all, is required for the condition to hold. 1.

As Graham said, “In the short run, the market is a voting machine, but in the long run, it is a weighing machine.”20 Ironically, to generate alpha, investors need the markets to be efficient—eventually. The market needs to realize that it has made an error and then to correct it. Otherwise, mispricings would persist forever, and in such a market, no one could reliably outperform. Market Efficiency and the Wisdom of Crowds Information is not a single big thing that’s locked in a safe. It exists in bits and pieces scattered around the world. Everybody has a little piece of the total information available. If information is widely scattered and diffuse, then no single individual is going to have much information relative to the total.

If information is widely scattered and diffuse, then no single individual is going to have much information relative to the total. In fact, regardless of how smart or informed a person is, any given individual has only a fraction of the information available to the entire market at any point in time. The function of the markets is to aggregate that information, evaluate it, and incorporate it into prices. Through the wisdom of crowds and the power of efficient markets, the current price of a security swiftly reflects the market’s collective assessment of the likelihood of possible, plausible, and probable future events. (To understand and appreciate the incredible information-gathering capability of the stock market, study Michael Maloney and J.


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What's Mine Is Yours: How Collaborative Consumption Is Changing the Way We Live by Rachel Botsman, Roo Rogers

"World Economic Forum" Davos, Abraham Maslow, Airbnb, Apollo 13, barriers to entry, behavioural economics, Bernie Madoff, bike sharing, Buckminster Fuller, business logic, buy and hold, carbon footprint, Cass Sunstein, collaborative consumption, collaborative economy, commoditize, Community Supported Agriculture, credit crunch, crowdsourcing, dematerialisation, disintermediation, en.wikipedia.org, experimental economics, Ford Model T, Garrett Hardin, George Akerlof, global village, hedonic treadmill, Hugh Fearnley-Whittingstall, information retrieval, intentional community, iterative process, Kevin Kelly, Kickstarter, late fees, Mark Zuckerberg, market design, Menlo Park, Network effects, new economy, new new economy, out of africa, Paradox of Choice, Parkinson's law, peer-to-peer, peer-to-peer lending, peer-to-peer rental, planned obsolescence, Ponzi scheme, pre–internet, public intellectual, recommendation engine, RFID, Richard Stallman, ride hailing / ride sharing, Robert Shiller, Ronald Coase, Search for Extraterrestrial Intelligence, SETI@home, Simon Kuznets, Skype, slashdot, smart grid, South of Market, San Francisco, Stewart Brand, systems thinking, TED Talk, the long tail, The Nature of the Firm, The Spirit Level, the strength of weak ties, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thorstein Veblen, Torches of Freedom, Tragedy of the Commons, transaction costs, traveling salesman, ultimatum game, Victor Gruen, web of trust, women in the workforce, work culture , Yochai Benkler, Zipcar

When you sign up, you become part of a hub that gives you access to the knowledge of millions of other users. The notion that the collective intelligence of thousands, even millions, of people can produce the results and knowledge that smaller groups and individuals can’t has been much discussed, probably best in James Surowiecki’s book The Wisdom of Crowds. But what’s new is applying collective intelligence to make product service systems more attractive than individual ownership. The in-depth knowledge accumulated through repeated consumer interactions presents a significant opportunity for businesses to form deeper relationships with customers and manage inventory more efficiently.

Meeting to decide these things would defeat the purpose of making life easier. And they didn’t want to create any kind of committee or nominate a leader to organize the effort, as that would be resorting back to the kind of centralized authority they were trying to avoid. As James Surowiecki writes in The Wisdom of Crowds, “How can people voluntarily—that is, without anyone telling them what to do—make their actions fit together in an efficient and orderly way?”24 With this need in mind, Stephanie launched the online version of the venture, WeCommune.com, in early 2009. A simple yet innovative platform, it makes it easier for people to come together and share resources in ways that fit into modern lifestyles.

Here Comes Everybody: The Power of Organizing Without Organizations (Penguin, 2008). Slade, Giles. Made to Break: Technology and Obsolescence in America (Harvard University Press, 2006). Stiglitz, Joseph. Making Globalization Work (W. W. Norton & Company., 2007). Strasser, Susan. Waste and Want: A Social History of Trash (Henry Holt, 1999). Surowiecki, James. The Wisdom of Crowds (Anchor Books, 2005). Tapscott, Don, and Anthony D. Williams. Wikinomics: How Mass Collaboration Changes Everything (Portfolio, 2008). Thackara, John. In the Bubble: Designing in a Complex World (MIT Press, 2006). Thaler, Richard, and Cass R. Sunstein. Nudge: Improving Decisions About Health, Wealth, and Happiness (Penguin, 2009).


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Too Big to Know: Rethinking Knowledge Now That the Facts Aren't the Facts, Experts Are Everywhere, and the Smartest Person in the Room Is the Room by David Weinberger

airport security, Alfred Russel Wallace, Alvin Toffler, Amazon Mechanical Turk, An Inconvenient Truth, Berlin Wall, Black Swan, book scanning, Cass Sunstein, commoditize, Computer Lib, corporate social responsibility, crowdsourcing, Danny Hillis, David Brooks, Debian, double entry bookkeeping, double helix, Dr. Strangelove, en.wikipedia.org, Exxon Valdez, Fall of the Berlin Wall, future of journalism, Future Shock, Galaxy Zoo, Gregor Mendel, Hacker Ethic, Haight Ashbury, Herman Kahn, hive mind, Howard Rheingold, invention of the telegraph, Jeff Hawkins, jimmy wales, Johannes Kepler, John Harrison: Longitude, Kevin Kelly, Large Hadron Collider, linked data, Neil Armstrong, Netflix Prize, New Journalism, Nicholas Carr, Norbert Wiener, off-the-grid, openstreetmap, P = NP, P vs NP, PalmPilot, Pluto: dwarf planet, profit motive, Ralph Waldo Emerson, RAND corporation, Ray Kurzweil, Republic of Letters, RFID, Richard Feynman, Ronald Reagan, scientific management, semantic web, slashdot, social graph, Steven Pinker, Stewart Brand, systems thinking, technological singularity, Ted Nelson, the Cathedral and the Bazaar, the scientific method, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, Whole Earth Catalog, X Prize

Just as James Surowiecki says, there is a type of expertise that can come from people who are in the same place without being any further organized. The Wisdom of Crowds opens with what is now the canonical example. At a county fair in the eighteenth century it was noticed that if you wanted to know how much a particular ox weighs, the average of the total guesses of fair-goers was likely to be closer than the estimate of any particular expert. Surowiecki’s book is careful to lay out the precise conditions under which crowds do better than experts—it depends on there being a diversity of opinion, independence, decentralization, and a way to derive a collective decision—but almost as soon as he published it, “the wisdom of crowds” was used to refer to everything from choosing presidents, to the making of best-selling fashions, to voting for your favorite on American Idol.

Harris, In the Shadow of Slavery: African Americans in New York City, 1626–1863 (University of Chicago Press: Chicago, 2004). An excerpt of the chapter titled “The New York City Draft Riots of 1863” can be found at http://www.press.uchicago.edu/Misc/Chicago/317749.html. 11 Howard Rheingold, Smart Mobs: The Next Social Revolution (Basic Books, 2003). 12 James Surowiecki, The Wisdom of Crowds (Random House, 2004). 13 Jeff Howe, “The Rise of Crowdsourcing,” Wired 14, no. 6 (June 2006), http://www.wired.com/wired/archive/14.06/crowds.html. See also Howe’s Crowdsourcing (Crown Business, 2008). 14 “Darpa Network Challenge: We Have a Winner,” https://network-challenge.darpa.mil/Default.aspx. 15 “How It Works” (MIT), 2009, http://balloon.mit.edu/mit/payoff/. 16 Darren Murph, “MIT-Based Team Wins DARPA’s Red Balloon Challenge, Demonstrates Power of Social Networks (and Cold Hard Cash),” December 6, 2009, http://www.engadget.com/2009/12/06/mit-based-team-wins-darpas-red-balloon-challenge-demonstrates/. 17 See Jonathan Zittrain’s “Minds for Sale” video at http://www.youtube.com/watch?

See also Books and book publishing Paper-based tools Parenting experts Patent Office, US PatientsLikeMe.com Pavement performance Peer-review journals Perception, facts and Permission-free knowledge Philosophy defining and quantifying knowledge information overload reality unresolved knowledge Pinker, Steven Planetary Skin initiative Plato PLoS One online journal Pogue, David Polio vaccine Politics Politifact.com Popper, Karl Population growth, Malthusian theory of Pornography Postmodernism Pragmatism PressThink.org Primary Insight Principles of Geology (Lyell) Prize4Life Protein folding ProteomeCommons.org Pseudo-science Public Library of Science (PLoS) Punchcard data Pyramid, knowledge Pyramid of organizational efficiency Quora Racial/ethnic identity Ramanujan, Srinivasa RAND Corporation Random Hacks of Kindness Rauscher, Francis Raymond, Eric Reagan, Ronald Reality Reason as the path to truth and knowledge critical debate on unresolved knowledge Reliability Repositories, open access Republic of Letters Republican Party Republic.com (Sunstein) Revolution in the Middle East Rheingold, Howard Richards, Ellen Swallow Riesman, David Robustness “The Rock” (Eliot) Rogers, William Rorty, Richard Rosen, Jay Roskam, Peter Rushkoff, Douglas Russia: Dogger Bank Incident Salk, Jonas Sanger, Larry Schmidt, Michael School shootings Science amateurs in crowdsourcing expertise failures in goals of hyperlinked inflation of scientific studies interdisciplinary approaches media relations Net-based inquiry open filtering journal articles open-notebook overgeneration of scientific facts philosophical and professional differences among scientists public and private realms scientific journals transformation of scientific knowledge Science at Creative Commons Science journal Scientific journals Scientific management Scientific method Self-interest: fact-based knowledge Semantic Web Seneca Sensory overload Sexual behavior The Shallows (Carr) Shapiro, Jesse Shared experiences Shilts, Randy Shirky, Clay Shoemaker, Carolyn Simplicity in scientific thought Simulation of physical interactions Slashdot.com Sloan Digital Sky Survey Smart mobs “Smarter planet” initiative Smith, Arfon Smith, Richard Soccer Social conformity Social networks crowdsourcing expertise Middle East revolutions pooling expertise scaling social filtering Social policy: social role of facts Social reform Dickens’s antipathy to fact-based knowledge global statistical support for Bentham’s ideas Social tools: information overload Society of Professional Journalists Socrates Software defaults Software development, contests for Sotomayor, Sonia Source transparency Space Shuttle disaster Spiro, Mary Sports Sprinkle, Annie Standpoint transparency Statistics emergence of Hunch.com Stopping points for knowledge The Structure of Scientific Revolutions (Kuhn) Stupidity, Net increasing Sub-networks Suel, Gurol Sunlight Foundation Sunstein, Cass Surowiecki, James Systems biology Tag cloud Tagging Tatalias, Jean Taylor, Frederick Wilson TechCamps Technodeterminism Technology easing information overload Technorati.com Television, homophily and Temptation of hyperlinks Think tanks Thoreau, Henry David The Tipping Point (Gladwell) Todd, Mac Toffler, Alvin TopCopder Topic-based expertise Torvalds, Linus Traditional knowledge Tranche Transparency hyperlinks contributing to objectivity and of the Net Open Government Initiative Transparency and Open Government project Triangular knowledge Trillin, Calvin Trust: reliability of information Trust-through-authority system Truth elements of knowledge reason as the path to value of networked knowledge Twitter Tyme, Mae Unnailing facts Updike, John USAID UsefulChem notebook Vaccinations Verizon Vietnam Virginia Polytechnic Institute and State University Wales, Jimmy Wallace, Alfred Russel Walter, Skip Washington Post Watson, James Welch, Jack Welfare The WELL (The Whole Earth’Lectronic Link) Whole Earth Catalog Wikipedia editorial policy LA Times wikitorial experiment policymaking Virginia Tech shootings Wikswo, John Wilbanks, John Wired magazine The Wisdom of Crowds (Surowiecki) Wise crowds Wittgenstein, Ludwig Wolfram, Stephen WolframAlpha.com World Bank World Cup World War I Wurman, Richard Saul Wycliffe, John York, Jillian YourEncore Zappa, Frank Zeleny, Milan Zettabyte Zittrain, Jonathan Zuckerman, Ethan a I’m leaving this as an unsupported idea because it’s not the point of this book.


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QI: The Third Book of General Ignorance (Qi: Book of General Ignorance) by John Lloyd, John Mitchinson

Albert Einstein, Apollo 11, Boris Johnson, British Empire, California gold rush, cognitive dissonance, Cornelius Vanderbilt, dark matter, double helix, epigenetics, Johann Wolfgang von Goethe, Johannes Kepler, Kickstarter, music of the spheres, Neil Armstrong, Nelson Mandela, out of africa, Ronald Reagan, The Wisdom of Crowds, trade route

His experiments with pigs failed miserably, and he was forced to conclude that his work had raised more questions than it answered. Towards the end of his long life he wrote, ‘We are surrounded – nay crushed – by a mass of details demanding explanation.’ Today most neuroscientists would say we still are. Why should you rely on the ‘wisdom of crowds’? You shouldn’t. The growing consensus among mathematicians and statisticians is that the ‘wisdom of crowds’ – the idea that lots of people can produce a better answer than a few people – is a myth. Charles Darwin’s cousin Francis Galton carried out the archetypal wisdom-of-crowds experiment in 1906. He went to a village fair and offered a prize to whoever could guess the weight of an ox.

What is the name of the Queen’s official residence? How many English kings named Henry have there been? What dynasty did Henry VII and Henry VIII belong to? Which king of Scotland succeeded Macbeth? Which dog stood by his master’s grave for 14 years? How did Pavlov get dogs to salivate? Why should you rely on the ‘wisdom of crowds’? Why should you avoid feral pigeons? How hot does water have to be to wash the bacteria off your hands? What would happen if the world suddenly stopped spinning? What is the deepest canyon in the USA? Where is the world’s tallest statue of Jesus Christ? What species of tree is the tallest ever?

A 2004 study showed that a varied group of problem-solvers made a better collective guess than a group of like-minded ‘experts’. It seems that if you want to improve the accuracy of a crowd’s estimate, add individuals who hold opinions that are actively opposed to the general consensus. It’s possible that the statisticians currently debunking the ‘wisdom of crowds’ are themselves a crowd whose judgments are suspect because they listen to each other. Though, paradoxically, that would be an argument both for and against the concept … Why should you avoid feral pigeons? Don’t bother – they’re not as germy as you think. Despite much scaremongering about pigeons, there’s almost nothing you can catch from them.


pages: 442 words: 94,734

The Art of Statistics: Learning From Data by David Spiegelhalter

Abraham Wald, algorithmic bias, Anthropocene, Antoine Gombaud: Chevalier de Méré, Bayesian statistics, Brexit referendum, Carmen Reinhart, Charles Babbage, complexity theory, computer vision, confounding variable, correlation coefficient, correlation does not imply causation, dark matter, data science, deep learning, DeepMind, Edmond Halley, Estimating the Reproducibility of Psychological Science, government statistician, Gregor Mendel, Hans Rosling, Higgs boson, Kenneth Rogoff, meta-analysis, Nate Silver, Netflix Prize, Northpointe / Correctional Offender Management Profiling for Alternative Sanctions, p-value, placebo effect, probability theory / Blaise Pascal / Pierre de Fermat, publication bias, randomized controlled trial, recommendation engine, replication crisis, self-driving car, seminal paper, sparse data, speech recognition, statistical model, sugar pill, systematic bias, TED Talk, The Design of Experiments, The Signal and the Noise by Nate Silver, The Wisdom of Crowds, Thomas Bayes, Thomas Malthus, Two Sigma

Expected frequencies promote understanding and an appropriate sense of importance. Odds ratios arise from scientific studies but should not be used for general communication. Graphics need to be chosen with care and awareness of their impact. CHAPTER 2 Summarizing and Communicating Numbers. Lots of Numbers Can we trust the wisdom of crowds? In 1907 Francis Galton, cousin of Charles Darwin and polymath originator of identification using fingerprints, weather forecasts and eugenics,fn1 wrote a letter to the prestigious science journal Nature about his visit to the Fat Stock and Poultry Exhibition in the port city of Plymouth.

He got hold of 787 of the tickets that had been filled out and chose the middle value of 1,207 lb (547 kg) as the democratic choice, ‘every other estimate being condemned as too high or too low by the majority of voters’. The dressed weight turned out to be 1,198 lb (543 kg), which was remarkably close to his choice based on the 787 votes.1 Galton titled his letter ‘Vox Populi’ (voice of the people), but this process of decision-making is now better known as the wisdom of crowds. Galton carried out what we might now call a data summary: he took a mass of numbers written on tickets and reduced them to a single estimated weight of 1,207 lb. In this chapter we look at the techniques that have been developed in the subsequent century for summarizing and communicating the piles of data that have become available.

The true value was … 1,616.2 Just one person guessed this precisely, 45% of people guessed below 1,616, and 55% guessed above, so there was little systematic tendency for the guesses to be either on the high or low side – we say the true value lay at the 45th percentile of the empirical data distribution. The median, which is the 50th percentile, over-estimated the true value by 1,775 – 1,616 = 159, so relative to the true answer the median was an over-estimate by around 10%, and only around 1 in 10 people got that close. So the wisdom of crowds was fairly good, getting closer to the truth than 90% of the individual people. Describing the Spread of a Data Distribution It is not enough to give a single summary for a distribution – we need to have an idea of the spread, sometimes known as the variability. For example, knowing the average adult male shoe size will not help a shoe firm decide the quantities of each size to make.


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The Art of Statistics: How to Learn From Data by David Spiegelhalter

Abraham Wald, algorithmic bias, Antoine Gombaud: Chevalier de Méré, Bayesian statistics, Brexit referendum, Carmen Reinhart, Charles Babbage, complexity theory, computer vision, confounding variable, correlation coefficient, correlation does not imply causation, dark matter, data science, deep learning, DeepMind, Edmond Halley, Estimating the Reproducibility of Psychological Science, government statistician, Gregor Mendel, Hans Rosling, Higgs boson, Kenneth Rogoff, meta-analysis, Nate Silver, Netflix Prize, Northpointe / Correctional Offender Management Profiling for Alternative Sanctions, p-value, placebo effect, probability theory / Blaise Pascal / Pierre de Fermat, publication bias, randomized controlled trial, recommendation engine, replication crisis, self-driving car, seminal paper, sparse data, speech recognition, statistical model, sugar pill, systematic bias, TED Talk, The Design of Experiments, The Signal and the Noise by Nate Silver, The Wisdom of Crowds, Thomas Bayes, Thomas Malthus, Two Sigma

• Expected frequencies promote understanding and an appropriate sense of importance. • Odds ratios arise from scientific studies but should not be used for general communication. • Graphics need to be chosen with care and awareness of their impact. CHAPTER 2 Summarizing and Communicating Numbers. Lots of Numbers Can we trust the wisdom of crowds? In 1907 Francis Galton, cousin of Charles Darwin and polymath originator of identification using fingerprints, weather forecasts and eugenics,* wrote a letter to the prestigious science journal Nature about his visit to the Fat Stock and Poultry Exhibition in the port city of Plymouth.

He got hold of 787 of the tickets that had been filled out and chose the middle value of 1,207 lb (547 kg) as the democratic choice, ‘every other estimate being condemned as too high or too low by the majority of voters’. The dressed weight turned out to be 1,198 lb (543 kg), which was remarkably close to his choice based on the 787 votes.1 Galton titled his letter ‘Vox Populi’ (voice of the people), but this process of decision-making is now better known as the wisdom of crowds. Galton carried out what we might now call a data summary: he took a mass of numbers written on tickets and reduced them to a single estimated weight of 1,207 lb. In this chapter we look at the techniques that have been developed in the subsequent century for summarizing and communicating the piles of data that have become available.

The true value was… 1,616.2 Just one person guessed this precisely, 45% of people guessed below 1,616, and 55% guessed above, so there was little systematic tendency for the guesses to be either on the high or low side—we say the true value lay at the 45th percentile of the empirical data distribution. The median, which is the 50th percentile, over-estimated the true value by 1,775–1,616 = 159, so relative to the true answer the median was an over-estimate by around 10%, and only around 1 in 10 people got that close. So the wisdom of crowds was fairly good, getting closer to the truth than 90% of the individual people. Describing the Spread of a Data Distribution It is not enough to give a single summary for a distribution—we need to have an idea of the spread, sometimes known as the variability. For example, knowing the average adult male shoe size will not help a shoe firm decide the quantities of each size to make.


pages: 230 words: 61,702

The Internet of Us: Knowing More and Understanding Less in the Age of Big Data by Michael P. Lynch

Affordable Care Act / Obamacare, Amazon Mechanical Turk, big data - Walmart - Pop Tarts, bitcoin, Cass Sunstein, Claude Shannon: information theory, cognitive load, crowdsourcing, data science, Edward Snowden, Firefox, Google Glasses, hive mind, income inequality, Internet of things, John von Neumann, meta-analysis, Nate Silver, new economy, Nick Bostrom, Panopticon Jeremy Bentham, patient HM, prediction markets, RFID, sharing economy, Steve Jobs, Steven Levy, the scientific method, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Twitter Arab Spring, WikiLeaks

To name the most obvious: the more rankings, the more reliable we tend to take the average score to be (1,000 rankings with an average of 4 stars is far more impressive than three rankings of 4.5 stars). Of course, we also know that the fact that many people like something doesn’t mean we’ll like it too. The fact that we so often trust such rankings—at least, in the right conditions—points out that we already tend to abide by the main lesson of James Surowiecki’s 2004 landmark book The Wisdom of Crowds. Surowiecki’s point was that in certain conditions, the aggregated answers of large groups could be wiser—could display more knowledge—than an individual, even an individual expert. Suroweicki’s most famous example comes from the work of Francis Galton, a British scientist. Galton examined a competition in which 787 contestants at a country fair estimated the weight of an ox.

After all, the interviewer example presumes that the tacit commitment in question is itself a product of the individuals’ beliefs. If so, then perhaps the best we can say is that what we can loosely call the group’s implicit commitment “supervenes” or is a product of the individuals’ commitments. 8. Surowiecki, The Wisdom of Crowds, xii. 9. David Leonhardt, “When the Crowd Isn’t Wise,” New York Times, July 7, 2012. 10. Nate Silver, “The Virtues and Vices of Election Prediction Markets,” New York Times, October 24, 2012. 11. I was helped to see these points in discussions with Sandy Goldberg and Nate Sheff. The example in the text is similar to that in Goldberg, “The Division of Epistemic Labor,” 117. 12.

Strawson, P. F. Freedom and Resentment and Other Essays. New York and London: Routledge, 1998. Sunstein, Cass R. Infotopia: How Many Minds Produce Knowledge. New York: Oxford University Press, 2006. _________. Republic.com 2.0. Princeton: Princeton University Press, 2009. Surowiecki, James. The Wisdom of Crowds. New York: Random House, 2005. Turkle, Sherry. Alone Together: Why We Expect More from Technology and Less from Each Other. New York: Basic Books, 2012. Uhlmann, Eric L., David Pizarro, David Tannenbaum, and Peter Ditto. “The Motivated Use of Moral Principles.” Judgment and Decision Making 4, no. 6 (2009): 476–91.


pages: 327 words: 103,336

Everything Is Obvious: *Once You Know the Answer by Duncan J. Watts

"World Economic Forum" Davos, active measures, affirmative action, Albert Einstein, Amazon Mechanical Turk, AOL-Time Warner, Bear Stearns, behavioural economics, Black Swan, business cycle, butterfly effect, carbon credits, Carmen Reinhart, Cass Sunstein, clockwork universe, cognitive dissonance, coherent worldview, collapse of Lehman Brothers, complexity theory, correlation does not imply causation, crowdsourcing, death of newspapers, discovery of DNA, East Village, easy for humans, difficult for computers, edge city, en.wikipedia.org, Erik Brynjolfsson, framing effect, Future Shock, Geoffrey West, Santa Fe Institute, George Santayana, happiness index / gross national happiness, Herman Kahn, high batting average, hindsight bias, illegal immigration, industrial cluster, interest rate swap, invention of the printing press, invention of the telescope, invisible hand, Isaac Newton, Jane Jacobs, Jeff Bezos, Joseph Schumpeter, Kenneth Rogoff, lake wobegon effect, Laplace demon, Long Term Capital Management, loss aversion, medical malpractice, meta-analysis, Milgram experiment, natural language processing, Netflix Prize, Network effects, oil shock, packet switching, pattern recognition, performance metric, phenotype, Pierre-Simon Laplace, planetary scale, prediction markets, pre–internet, RAND corporation, random walk, RFID, school choice, Silicon Valley, social contagion, social intelligence, statistical model, Steve Ballmer, Steve Jobs, Steve Wozniak, supply-chain management, tacit knowledge, The Death and Life of Great American Cities, the scientific method, The Wisdom of Crowds, too big to fail, Toyota Production System, Tragedy of the Commons, ultimatum game, urban planning, Vincenzo Peruggia: Mona Lisa, Watson beat the top human players on Jeopardy!, X Prize

But in the case of prediction markets, the prices are explicitly interpreted as making a prediction about the outcome in question—for example, the probability of an Obama victory on the eve of Election Day was predicted by the Iowa Electronic Markets to be 92 percent. In generating predictions like this one, prediction markets exploit a phenomenon that New Yorker writer James Surowiecki dubbed the “wisdom of crowds”—the notion that although individual people tend to make highly error-prone predictions, when lots of these estimates are averaged together, the errors have a tendency to cancel out; hence the market is in some sense “smarter” than its constitutents. Many such markets also require participants to bet real money, thus people who know something about a particular topic are more likely to participate than people who don’t.

As a result, ratings analysts and traders alike collectively placed too low a probability on a nationwide drop in real-estate values, and so badly underestimated the risk of mortgage defaults and foreclosure rates.14 At first, it might seem that this would have been a perfect application for prediction markets, which might have done a better job of anticipating the crisis than all the “quants” working in the banks. But in fact it would have been precisely these people—along with the politicians, government regulators, and other financial market specialists who also failed to anticipate the crisis—who would have been participating in the prediction market, so it’s unlikely that the wisdom of crowds would have been any help at all. Arguably, in fact, it was precisely the “wisdom” of the crowd that got us into the mess in the first place. So if models, markets, and crowds can’t help predict black swan events like the financial crisis, then what are we supposed to do about them? A second problem with methods that rely on historical data is that big, strategic decisions are not made frequently enough to benefit from a statistical approach.

Modeling Contagion Through Facebook News Feed.” Third International Conference on Weblogs and Social Media, at San Jose, CA. AAAI Press. Sunstein, Cass R. 2005. “Group Judgments: Statistical Means, Deliberation, and Information Markets.” New York Law Review 80 (3):962–1049. Surowiecki, James. 2004. The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies, and Nations. New York: Doubleday. Svenson, Ola. 1981. “Are We All Less Risky and More Skillful Than Our Fellow Drivers?” Acta Psychologica 47 (2):143–48. Tabibi, Matt. 2009. “The Real Price of Goldman’s Giganto-Profits.”


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Can Democracy Work?: A Short History of a Radical Idea, From Ancient Athens to Our World by James Miller

Berlin Wall, Black Lives Matter, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, classic study, colonial rule, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Graeber, disinformation, Donald Trump, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, income inequality, Joseph Schumpeter, mass incarceration, means of production, Occupy movement, Plato's cave, public intellectual, Ralph Waldo Emerson, Republic of Letters, Steve Bannon, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, transatlantic slave trade, union organizing, upwardly mobile, Vilfredo Pareto

“Take away from these … wills the pluses and minuses”: Rousseau, Social Contract, bk. 2, chap. 3, in Œuvres complètes, 3:371. According to Condorcet’s mathematical argument: See Hélène Landemore, Democratic Reason: Politics, Intelligence, and the Rule of the Many (Princeton: Princeton University Press, 2013), 70–75. “the wisdom of crowds”: James Surowiecki, The Wisdom of Crowds (New York: Doubleday, 2004). “I saw people pass by, arm in arm”: Louis-Sébestien Mercier, Paris pendant la Révolution (1789–1798), ou, Le Nouveau Paris (Paris, 1862), bk. 3, chap. 82. “To form a constitution for a territory”: An Authentic Copy of the New Plan of the French Constitution, as Presented to the National Convention, by the Committee of Constitution, to Which Is Prefixed the Speech of M.

Far more emphatically than Condorcet, Rousseau also respected the role that sentiments and the passions played in public life. Rousseau’s ambivalence about reason would eventually reappear—with a vengeance—in the Convention’s debates over Condorcet’s draft constitution, which represented a remarkable attempt to institutionalize what one modern writer has called “the wisdom of crowds.” * * * ON JANUARY 21, 1793, thousands of Frenchmen flocked to the largest square in Paris, once the Place de Louis XV, but renamed the Place de la Révolution (and eventually, in a gesture of reconciliation, renamed Place de la Concorde). The crowd had gathered on that wintry day to watch their former king face death.

My experience with participatory democracy has taught me the limits of any regime of consensus, which risks silencing disagreements over political alternatives that are important to debate openly. Our ability to reason and exercise sound political judgment is more limited than Condorcet supposed—rendering “the wisdom of crowds” a shaky assumption. But I also believe that modern institutions can do more to appeal to, and engage, people’s capacities for reflection and collective deliberation. As the American philosopher David M. Estlund observes, “We sometimes expect too little” from our liberal democracies “precisely because” we prematurely give up on an “aspirational theory,” a “normative standard that forces the question of whether more can realistically be expected.”


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The Open Organization: Igniting Passion and Performance by Jim Whitehurst

Airbnb, behavioural economics, cloud computing, content marketing, crowdsourcing, digital capitalism, en.wikipedia.org, fail fast, Google Hangouts, Infrastructure as a Service, job satisfaction, Kaizen: continuous improvement, market design, meritocracy, Network effects, new economy, place-making, platform as a service, post-materialism, profit motive, risk tolerance, Salesforce, shareholder value, side project, Silicon Valley, Skype, Snapchat, Steve Jobs, subscription business, TED Talk, The Wisdom of Crowds, Tony Hsieh

Whyte, author of The Organization Man, in a 1952 issue of Fortune. The idea is that when a group of people work together, they tend to want to reach some kind of harmony and to minimize conflict, which so often leads to terrible and even tragic results. James Surowiecki tackles this subject in his now famous book, The Wisdom of Crowds, in which he discusses the research done by the Yale University psychologist Irving Janis to understand how groupthink was responsible for the poor decision making leading up to events like the attack on Pearl Harbor and the Bay of Pigs invasion. Surowiecki writes: “Homogeneous groups become more cohesive more easily than diverse groups, and as they become more cohesive they become more dependent on the group, more isolated from outside opinions, and therefore more convinced that the group’s judgment on important issues must be right.

Drucker, “Managing Oneself,” Harvard Business Review, January 2005, http://hbr.org/2005/01/managing-oneself/ar/1. 2. Jonah Lehrer, “Groupthink: The Brainstorming Myth,” The New Yorker, January 30, 2012. 3. Richard Wiseman, 59 Seconds: Think a Little, Change a Lot (New York: Random House, 2010), 213–214. 4. James Surowiecki, The Wisdom of Crowds (New York: Anchor, 2005), 36. 5. Hill et al., Collective Genius, 121. 6. Ed Catmull and Amy Wallace, Creativity, Inc. (New York: Random House, 2014), Kindle version, location 1374. 7. Hill et al., Collective Genius, 139. 8. Ibid., 24. 9. Linux Kernel Mailing List, https://lkml.org/lkml/2013/2/21/225. 10.

Sheth, and David Wolfe. Firms of Endearment. Upper Saddle River, NJ: Pearson Education, 2014. Sloane, Paul, ed. A Guide to Open Innovation and Crowdsourcing. Philadelphia: Kogan Page Limited, 2011. Stack, Jack, with Bo Burlingham. The Great Game of Business. New York: Crown Business, 2013. Surowiecki, James. The Wisdom of Crowds. New York: Anchor, 2005. Tapscott, Don, David Ticoll, and Alex Lowy. Digital Capital. Boston: Harvard Business School Press, 2000. Tapscott, Don, and David Ticoll. The Naked Corporation. New York: Penguin, 2003. Tapscott, Don, and Anthony D. Williams. Wikinomics. New York: Portfolio Penguin, 2008. ——— .


pages: 224 words: 64,156

You Are Not a Gadget by Jaron Lanier

1960s counterculture, Abraham Maslow, accounting loophole / creative accounting, additive manufacturing, Albert Einstein, Bear Stearns, call centre, cloud computing, commoditize, crowdsourcing, death of newspapers, different worldview, digital Maoism, Douglas Hofstadter, Extropian, follow your passion, General Magic , hive mind, Internet Archive, Jaron Lanier, jimmy wales, John Conway, John Perry Barlow, John von Neumann, Kevin Kelly, Long Term Capital Management, Neal Stephenson, Network effects, new economy, packet switching, PageRank, pattern recognition, Ponzi scheme, Project Xanadu, Ray Kurzweil, Richard Stallman, Savings and loan crisis, Silicon Valley, Silicon Valley startup, slashdot, social graph, stem cell, Steve Jobs, Stewart Brand, Stuart Kauffman, synthetic biology, technological determinism, Ted Nelson, telemarketer, telepresence, the long tail, The Wisdom of Crowds, trickle-down economics, Turing test, Vernor Vinge, Whole Earth Catalog

This is an idea that will be examined in Chapter 10. An Odd Lack of Curiosity The “wisdom of crowds” effect should be thought of as a tool. The value of a tool is its usefulness in accomplishing a task. The point should never be the glorification of the tool. Unfortunately, simplistic free market ideologues and noospherians tend to reinforce one another’s unjustified sentimentalities about their chosen tools. Since the internet makes crowds more accessible, it would be beneficial to have a wide-ranging, clear set of rules explaining when the wisdom of crowds is likely to produce meaningful results. Surowiecki proposes four principles in his book, framed from the perspective of the interior dynamics of the crowd.

While there is a lot of talk about networks and emergence from the top American capitalists and technologists, in truth most of them are hoping to thrive by controlling the network that everyone else is forced to pass through. Everyone wants to be a lord of a computing cloud. For instance, James Surowiecki in The Wisdom of Crowds extols an example in which an online crowd helped find gold in a gold mine even though the crowd didn’t own the gold mine. There are many forms of this style of yearning. The United States still has top universities and corporate labs, so we’d like the world to continue to accept intellectual property laws that send money our way based on our ideas, even when those ideas are acted on by others.


pages: 121 words: 31,813

The Art of Execution: How the World's Best Investors Get It Wrong and Still Make Millions by Lee Freeman-Shor

Alan Greenspan, behavioural economics, Black Swan, buy and hold, Carl Icahn, cognitive bias, collapse of Lehman Brothers, credit crunch, Daniel Kahneman / Amos Tversky, diversified portfolio, family office, I think there is a world market for maybe five computers, index fund, Isaac Newton, Jeff Bezos, Long Term Capital Management, loss aversion, Market Wizards by Jack D. Schwager, Pershing Square Capital Management, Richard Thaler, Robert Shiller, rolodex, Skype, South Sea Bubble, Stanford marshmallow experiment, Steve Jobs, technology bubble, The Wisdom of Crowds, too big to fail, tulip mania, world market for maybe five computers, zero-sum game

* * * 3 ‘Judgment under uncertainty: Heuristics and biases’, Science, by Amos Tversky and Daniel Kahneman (1974). 4 Free Radicals: The Secret Anarchy of Science, by Michael Brooks (2011). 5 The General Theory of Employment, Interest and Money, by John Maynard Keynes (1936). 6 How We Decide, by Johan Lehrer (2009). 7 ‘Money: A Bias for the Whole’, Journal of Consumer Research, by Himanshu Mishra, Arul Mishra and Dhananjay Nayakankuppam (2006). 8 ‘Denomination Effect’, Journal of Consumer Research, Priya Raghubir and Joydeep Srivastava (2009). 9 One Up on Wall Street, by Peter Lynch and John Rothchild (2000). 10 The Dhandho Investor, by Mohnish Pabrai (2007). 11 Quote attributed to Donald Rumsfeld. 12 Being Right or Making Money, by Ned Davis (2000). 13 Ibid. 14 Fortune’s Formula, by William Poundstone (2006). 15 blog.asmartbear.com/ignoring-the-wisdom-of-crowds.html 16 The Little Book of Behavioural Investing, by James Montier (2010). 17 An Astronaut’s Guide to Life on Earth, by Col. Chris Hadfield (2013). Referring to his first mission where the objective was to construct a docking module on the Russian space station Mir. 18 In Market Wizards, by Jack D. Schwager (1990). 19 In The New Market Wizards, by Jack D. Schwager (1994). 20 So Far, So Good, by Roy R. Neuberger (1997). 21 The Wisdom of Crowds, by James Surowiecki (2005) 22 Predictably Irrational, by Dan Ariely (2009).


Blindside: How to Anticipate Forcing Events and Wild Cards in Global Politics by Francis Fukuyama

Asian financial crisis, banking crisis, Berlin Wall, Bletchley Park, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, cognitive bias, contact tracing, cuban missile crisis, currency risk, energy security, Fairchild Semiconductor, flex fuel, global pandemic, Herman Kahn, income per capita, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John von Neumann, low interest rates, mass immigration, Menlo Park, Mikhail Gorbachev, moral hazard, Norbert Wiener, oil rush, oil shale / tar sands, oil shock, packet switching, RAND corporation, Ray Kurzweil, reserve currency, Ronald Reagan, The Wisdom of Crowds, trade route, Vannevar Bush, Vernor Vinge, Yom Kippur War

Such organizational structures may simplify data collection but can also make processing good insights more difficult. There are alternatives. Structured databases can capture and relate varied information like data on demographics, economics, and energy use. Information markets can help make sense of the “wisdom of crowds.” Analyst reports can target underlying, quantifiable trends. In many situations, from national security to corporate competitive intelligence, secret information is often valued over publicly available or open-source information, which may be marginalized or ignored altogether. A portfolio theory of collecting information, however, emphasizes using a multiplicity of data sources—both public and private.

But the integration of all that disparate information ultimately relies upon the intuitive judgments of the human mind. 2990-7 ch09 schwarz 100 7/23/07 12:12 PM Page 100 peter schwartz and doug randall In an interview with us, James Surowiecki, New Yorker business columnist and author of The Wisdom of Crowds, noted three open-source ways to find relevant data and opinions outside of one’s most familiar frame of reference: discover unfamiliar terrain on the Internet; take high-quality but undervalued academic work and transport it to a different environment where it can be of high value; and read outside your field of expertise to find potentially useful metaphors and conceptual insights.2 When multiple sources are used and interpreted together, we have found that it is easier to separate the signal from the noise.

Hamburg, and Joshua Lederberg, eds., Microbial Threats to Health: Emergence, Detection, and Response (Washington: National Academies Press, 2003), p. 8. Chapter Nine 1. George Kennan, “The Sources of Soviet Conduct,” Foreign Affairs (July 1947); the article was published under the pseudonym “X.” 2. James Surowiecki, The Wisdom of Crowds (New York: Random House, 2004). 3. Robert William Fogel, The Fourth Awakening and the Future of Egalitarianism (University of Chicago Press, 2000). For examples of Bellah’s writings, see Beyond Belief: Essays on Religion in a Post-Traditional World, 2nd ed. (University of California Press, 1991); The Broken Covenant, 2nd ed.


pages: 464 words: 117,495

The New Trading for a Living: Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management by Alexander Elder

additive manufacturing, Atul Gawande, backtesting, behavioural economics, Benoit Mandelbrot, buy and hold, buy low sell high, Checklist Manifesto, computerized trading, deliberate practice, diversification, Elliott wave, endowment effect, fear index, loss aversion, mandelbrot fractal, margin call, offshore financial centre, paper trading, Ponzi scheme, price stability, psychological pricing, quantitative easing, random walk, Reminiscences of a Stock Operator, risk tolerance, short selling, South Sea Bubble, systematic trading, systems thinking, The Wisdom of Crowds, transaction costs, transfer pricing, traveling salesman, tulip mania, zero-sum game

A Positive Group You don't have to be a hermit—steering clear of the crowd's impulsivity doesn't mean you have to trade in total solitude. While some of us prefer doing it that way, intelligent and productive groups can exist. Their key feature has to be independent decision making. This concept is clearly explained in a book, The Wisdom of Crowds, by a financial journalist James Surowiecki. He acknowledges that members of most groups constantly influence one another, creating waves of shared feelings and actions. A smart group is different: all members make independent decisions without knowing what others are doing. Instead of impacting each other and creating emotional waves, members of an intelligent group benefit from combining their knowledge and expertise.

Instead of impacting each other and creating emotional waves, members of an intelligent group benefit from combining their knowledge and expertise. The function of a group leader is to maintain this structure and to bring individual decisions up for a vote. In 2004, a year prior to reading The Wisdom of Crowds, I organized a group of traders along those lines. I continue to manage it with my friend Kerry Lovvorn—the SpikeTrade group. We run a trading competition, with each round lasting one week. After the market closes on Friday, the stock picks section of the website becomes closed to viewing by members until 3 p.m. on Sunday.

The results of leading group members, posted on the site, have been spectacular. The key point is that all decisions about stock selection and direction must be made in solitude, without seeing what the leaders or other members are doing. The sharing begins after all votes are in. This combination of independent decision making with sharing brings forth “the wisdom of crowds,” tapping the collective wisdom of the group and its leaders. ■ 15. Psychology of Trends Each price represents a momentary consensus of value among market participants. Each tick reflects the latest vote on the value of a trading vehicle. Any trader can “put in his two cents worth” by giving an order to buy or sell, or by refusing to trade at the current level.


pages: 265 words: 15,515

Nomad Citizenship: Free-Market Communism and the Slow-Motion General Strike by Eugene W. Holland

business cycle, capital controls, cognitive dissonance, Colonization of Mars, commons-based peer production, complexity theory, continuation of politics by other means, deskilling, Eben Moglen, Firefox, Frederick Winslow Taylor, Free Software Foundation, full employment, Herbert Marcuse, informal economy, invisible hand, it's over 9,000, Jane Jacobs, Kim Stanley Robinson, Lewis Mumford, means of production, microcredit, military-industrial complex, money: store of value / unit of account / medium of exchange, Naomi Klein, New Urbanism, peak oil, post-Fordism, price mechanism, Richard Stallman, Rochdale Principles, Ronald Coase, scientific management, slashdot, Stuart Kauffman, The Death and Life of Great American Cities, The Wisdom of Crowds, transaction costs, Upton Sinclair, urban renewal, wage slave, working poor, Yochai Benkler

On the basis of extensive historical studies, Fernand Braudel has pro­ posed an Important distinction between markets and antimarkets that can serve as one point of departure.38 Along similar lines, but on the basis of M arx’s theoretical investigations, Deleuze and Guattari distinguished be­ tween the positive, economic component of markets and their negative, power component.39 More specifically, James Surowiecki, in his recent work The Wisdom of Crowds, lays out the conditions under which largescale interactive systems such as markets can produce surprising results in the domains of coordination and cooperation as well as cognition.40 The prerequisites for the wisdom of crowds to emerge, as he shows, include diversity and independence of knowledge or opinion, decentralization of decisions, and some mechanism to aggregate multiple decisions to pro­ duce a result—prerequisites that truly free free markets often realize.

The result of the aggrega­ tion mechanism of the market would then be more than mere efficiency: it would be an aggregated version of the Common Good. Like the free, open-source software movement, Wikipedia, or the NASA clickworkers discussed in the previous chapter, a nomad market intentionally oriented to the Common Good in this way would harness what James Surowiecki has called the wisdom of crowds.47 The resultant definition of the Com­ mon Good would, of course, always be an approximation, never perfec­ tion itself. And it would not constitute the kind of explicitly agreed-on ultimate end that, for von Hayek, signals the death of liberal society. N o­ mad market agents would be free to pursue their particular ends, as long as this pursuit is coupled with pursuit of their particular versions of the Common Good, with the market producing a continually aggregated and reaggregated approximation of a collective version of the Common Good.

But it turned out that currency markets, too, can operate perfectly well without a standard of value (although they are subject to volatility when subject to the disproportionate antimarket power of certain players). Here it is crucial to distinguish between money as a means of circulation and as a standard of evaluation.131 In nomad markets, money functions solely as a means of circulation, and evaluation is not tied to a standard but left to free-market mechanisms of distributed intelligence and the “wisdom of crowds.”132 Once free from the standard of labor-value, nomad markets evaluate collectively, allocate time and resources, and do the other (in von Hayek’s words) “marvelous” things they do, in response to a range of consider­ ations informing aggregate demand and supply. Of course, even capital­ ist markets must respond in some degree to consumer demand.


pages: 349 words: 114,038

Culture & Empire: Digital Revolution by Pieter Hintjens

4chan, Aaron Swartz, airport security, AltaVista, anti-communist, anti-pattern, barriers to entry, Bill Duvall, bitcoin, blockchain, Boeing 747, bread and circuses, business climate, business intelligence, business process, Chelsea Manning, clean water, commoditize, congestion charging, Corn Laws, correlation does not imply causation, cryptocurrency, Debian, decentralized internet, disinformation, Edward Snowden, failed state, financial independence, Firefox, full text search, gamification, German hyperinflation, global village, GnuPG, Google Chrome, greed is good, Hernando de Soto, hiring and firing, independent contractor, informal economy, intangible asset, invisible hand, it's over 9,000, James Watt: steam engine, Jeff Rulifson, Julian Assange, Kickstarter, Laura Poitras, M-Pesa, mass immigration, mass incarceration, mega-rich, military-industrial complex, MITM: man-in-the-middle, mutually assured destruction, Naomi Klein, national security letter, Nelson Mandela, new economy, New Urbanism, no silver bullet, Occupy movement, off-the-grid, offshore financial centre, packet switching, patent troll, peak oil, power law, pre–internet, private military company, race to the bottom, real-name policy, rent-seeking, reserve currency, RFC: Request For Comment, Richard Feynman, Richard Stallman, Ross Ulbricht, Russell Brand, Satoshi Nakamoto, security theater, selection bias, Skype, slashdot, software patent, spectrum auction, Steve Crocker, Steve Jobs, Steven Pinker, Stuxnet, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, trade route, transaction costs, twin studies, union organizing, wealth creators, web application, WikiLeaks, Y2K, zero day, Zipf's Law

More than that, I'll show how to build them, the shining digital cities of our future. The Wisdom of Crowds Niccolo Machiavelli observed, in "Discourses on the First Decade of Titus Livius" that: "As for prudence and stability of purpose, I affirm that a people is more prudent, more stable, and of better judgment than a prince. Nor is it without reason that the voice of the people has been likened to the voice of God; for we see that wide-spread beliefs fulfill themselves, and bring about marvelous results." In his book "The Wisdom of Crowds," James Surowiecki wrote, "under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them."

Magic Machines From Bricks to Bits Cost Gravity and the Digital Petri Dish The First Law A Brief History of the Internet What Drives Digital Society? Of Mice and Dinosaurs The Establishment Under Assault It's All in the Remix The Lost Continent Gets On Line The Asynchronous Society The Economic Quickening From Innocence to Authority Chapter 2. Spheres of Light The Wisdom of Crowds Wiser and More Constant than a Prince Origins of Social Architecture The Toolbox Sidebars The Collective Intelligence Index, or CII Final Thoughts Chapter 3. Faceless Societies Humanity as a Wise Crowd Sports Break The Face in the Mirror The Borgia Hypothesis Natural Born Killers Stupid, Mad, or Bad Sporting Colors Stupidity is Not Random Society Versus the Individual How The Bandit Got His Gang From Bandits to Bakers Fixing the Sick Men Summing Up Chapter 4.

Any attempt to describe how important and valuable Wikipedia is would fail by understatement. As a species, we only really have two fundamental assets: ourselves, and our knowledge. When I scored Wikipedia in “Spheres of Light”, it hit 96%. Wikipedia is not perfect, though it comes close. This isn't accidental -- it was practically founded on the principles of the wisdom of crowds. The one area it does not handle perfectly is current events -- politics, sports, news -- where there is still money at stake. Wikipedia is the ultimate in collective property, the antithesis of private property with its strong rights, de jure protection, profits, and friction. It is the ultimate slap in the face to the right-wing economists and their belief that wealth comes from individuals rather than society.


pages: 348 words: 83,490

More Than You Know: Finding Financial Wisdom in Unconventional Places (Updated and Expanded) by Michael J. Mauboussin

Alan Greenspan, Albert Einstein, Andrei Shleifer, Atul Gawande, availability heuristic, beat the dealer, behavioural economics, Benoit Mandelbrot, Black Swan, Brownian motion, butter production in bangladesh, buy and hold, capital asset pricing model, Clayton Christensen, clockwork universe, complexity theory, corporate governance, creative destruction, Daniel Kahneman / Amos Tversky, deliberate practice, demographic transition, discounted cash flows, disruptive innovation, diversification, diversified portfolio, dogs of the Dow, Drosophila, Edward Thorp, en.wikipedia.org, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, fixed income, framing effect, functional fixedness, hindsight bias, hiring and firing, Howard Rheingold, index fund, information asymmetry, intangible asset, invisible hand, Isaac Newton, Jeff Bezos, John Bogle, Kenneth Arrow, Laplace demon, Long Term Capital Management, loss aversion, mandelbrot fractal, margin call, market bubble, Menlo Park, mental accounting, Milgram experiment, Murray Gell-Mann, Nash equilibrium, new economy, Paul Samuelson, Performance of Mutual Funds in the Period, Pierre-Simon Laplace, power law, quantitative trading / quantitative finance, random walk, Reminiscences of a Stock Operator, Richard Florida, Richard Thaler, Robert Shiller, shareholder value, statistical model, Steven Pinker, stocks for the long run, Stuart Kauffman, survivorship bias, systems thinking, The Wisdom of Crowds, transaction costs, traveling salesman, value at risk, wealth creators, women in the workforce, zero-sum game

Meehl, “Clinical Versus Actuarial Judgment,” in Heuristics and Biases: The Psychology of Intuitive Judgment, ed. Thomas Gilovich, Dale Griffin, and Daniel Kahneman (Cambridge: Cambridge University Press, 2002), 716-29. 6 Gawande, Complications, 44. 7 Katie Haffner, “In an Ancient Game, Computing’s Future,” The New York Times, August 1, 2002. 8 James Surowiecki, The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations (New York: Doubleday, 2004). 9 Joe Nocera, “On Oil Supply, Opinions Aren’t Scarce,” The New York Times, September 10, 2005. 10 Philip E. Tetlock, Expert Political Judgment: How Good Is It?

ar=1358&L2=18&L3=31&srid=6&gp=1. 2 Nancy Weil, “Innocentive Pairs R&D Challenges with Researchers,” Bio-IT World, May 29, 2003. 3 Some companies are trying to create an internal mechanism to match questions with answers. For example, Hewlett-Packard has a system called SHOCK (Social Harvesting of Community Knowledge); see http://www.hpl.hp.com/research/idl/projects/shock. 4 Francis Galton, “Vox Populi,” Nature 75 (March 7, 1907): 450-451; reprint, 1949. Also, James Surowiecki, The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations (New York: Random House, 2004). 5 Norman L. Johnson, “Collective Problem Solving: Functionality beyond the Individual,” LA-UR-98-2227 (1998); Jack L. Treynor, “Market Efficiency and the Bean Jar Experiment,” Financial Analysts Journal (May-June 1987): -53; Sherry Sontag and Christopher Drew, Blind Man’s Bluff: The Untold Story of American Submarine Espionage (New York: Perseus Books, 1998), 58-59. 6 Kay-Yut Chen, Leslie R.

Strogatz, Steven. Sync: The Emerging Science of Spontaneous Order. New York: Hyperion Books, 2003. Surowiecki, James. “Damn the Slam PAM Plan!” Slate, July 30, 2003. ——. “Decisions, Decisions.” New Yorker, March 28, 2003. http://www.newyorker.com/archive/2003/03/24/030324ta_talk_surowiecki. ——. The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations. New York: Random House, 2004. Taleb, Nassim Nicholas. Fooled By Randomness: The Hidden Role of Chance in Markets and in Life. New York: Texere, 2001. ——. The Black Swan: The Impact of the Highly Improbable.


pages: 313 words: 84,312

We-Think: Mass Innovation, Not Mass Production by Charles Leadbeater

1960s counterculture, Andrew Keen, barriers to entry, bioinformatics, c2.com, call centre, citizen journalism, clean water, cloud computing, complexity theory, congestion charging, death of newspapers, Debian, digital divide, digital Maoism, disruptive innovation, double helix, Douglas Engelbart, Edward Lloyd's coffeehouse, folksonomy, frictionless, frictionless market, future of work, game design, Garrett Hardin, Google Earth, Google X / Alphabet X, Hacker Ethic, Herbert Marcuse, Hernando de Soto, hive mind, Howard Rheingold, interchangeable parts, Isaac Newton, James Watt: steam engine, Jane Jacobs, Jaron Lanier, Jean Tirole, jimmy wales, Johannes Kepler, John Markoff, John von Neumann, Joi Ito, Kevin Kelly, knowledge economy, knowledge worker, lateral thinking, lone genius, M-Pesa, Mark Shuttleworth, Mark Zuckerberg, Marshall McLuhan, Menlo Park, microcredit, Mitch Kapor, new economy, Nicholas Carr, online collectivism, Paradox of Choice, planetary scale, post scarcity, public intellectual, Recombinant DNA, Richard Stallman, Shoshana Zuboff, Silicon Valley, slashdot, social web, software patent, Steven Levy, Stewart Brand, supply-chain management, synthetic biology, the Cathedral and the Bazaar, The Death and Life of Great American Cities, the long tail, the market place, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Tragedy of the Commons, Whole Earth Catalog, work culture , Yochai Benkler, Zipcar

Several books heavily influenced my thinking, including Ilkka Tuomi’s Networks of Innovation, Steven Weber’s The Success of Open Source, Yochai Benkler’s The Wealth of Networks, Henry Chesbrough’s Open Innovation, Steve Johnson’s Emergence, Carliss Baldwin and Kim Clark’s Design Rules, Eric von Hippel’s Democratizing Innovation, C. K. Prahalad and Venkat Ramaswamy’s The Future of Competition, Scott Page’s The Difference, James Surowiecki’s The Wisdom of Crowds and Chris Anderson’s The Long Tail. The other books, papers and articles I have drawn on are listed in the bibliography. Should you think that is incomplete, you can go to the wiki version of the book and add in your own references and links. Many of the ideas were developed through projects I worked on with other people or by speaking at seminars and workshops.

Available from http://www.upgrade-cepis.org/ issues/2005/3/up6-3Amor.pdf 10 Steven Weber, The Success of Open Source (Cambridge, MA/London: Harvard University Press, 2004) 11 Thomas Kuhn, The Structure of Scientific Revolutions (University of Chicago Press, 1962), p. 10 12 Richard K. Lester and Michael Piore, Innovation: The Mission Dimension (Cambridge, MA/London: Harvard University Press, 2004) 13 Andrew Hargadon, How Breakthroughs Happen (Boston, MA: HBS Press, 2003) 14 James Surowiecki, The Wisdom of Crowds (Little, Brown, 2004) 15 Scott E. Page, The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies (Princeton University Press, 2007) 16 Bart Nooteboom, Learning and Innovation in Organizations and Economies (Oxford University Press, 2000) 17 Steven Weber, The Success of Open Source (Cambridge, MA/London: Harvard University Press, 2004) 18 Articles by Lakhani, Ghosh and Lerner in Joseph Feller, Brian Fitzgerald, Scott A.

., Amateurs, Professionals, and Serious Leisure (Montreal/Kingston: McGill-Queen’s University Press, 1992) Steil, Ben, David G. Victor, and Richard R. Nelson (Eds), Technological Innovation & Economic Performance (Princeton University Press, 2002) Sunstein, Cass, Republic.com (Princeton University Press, 2001) Surowiecki, James, The Wisdom of Crowds (Little, Brown, 2004) Sutton, Robert I., Weird Ideas that Work (Penguin, 2001) Tapscott, Don, and Antony D. Williams, Wikinomics: How Mass Collaboration Changes Everything (Penguin, 2007) Taylor, Charles, The Ethics of Authenticity (Cambridge, MA: Harvard University Press, 1991) Taylor, Charles, Sources of the Self: The Making of the Modern Identity (Cambridge University Press, 1992) Taylor, William C., and Polly LaBarre, Mavericks at Work: Why the Most Original Minds in Business Win (HarperCollins, 2006) Teece, David J., Gary Pisano and Amy Shuen, ‘Dynamic Capabilities and Strategic Management’ Strategic Management Journal, 18.7, pp. 509–33, 1997 Thackara, John, In the Bubble (Cambridge, MA/London: MIT Press, 2005) Trippi, Joe, The Revolution Will Not Be Televised (New York: HarperCollins, 2004) Tuomi, Ilkka, Networks of Innovation (Oxford University Press, 2002) Turner, Fred, From Counterculture to Cyberculture (University of Chicago Press, 2006) Vaidhyanathan, Siva, The Anarchist in the Library: How the Clash Between Freedom and Control Is Hacking the Real World and Crashing the System (New York: Basic Books, 2004) Volberda, Henk W., Building the Flexible Firm (New York: Oxford University Press, 1998) Von Hippel, Eric, ‘Horizontal Innovation Networks – By and For Users’, MIT Sloan School of Management Working Paper No. 4366–02 (2002) Von Hippel, Eric, Democratizing Innovation (Cambridge, MA/London: MIT Press, 2005) Von Hippel, Eric, Christian Luthje and Cornelius Herstatt, ‘The Dominant Role of “Local” Information in User Innovation: The Case of Mountain Biking’, MIT Sloan School of Management Working Paper (2002) Von Hippel, Eric, and Georg von Krogh, ‘Open Source Software and the Private-Collective Innovation Model: Issues for Organization Science’, Organization Science (2003) Von Hippel, Eric, The Sources of Innovation (Oxford University Press, 1995) Waldman, Simon, ‘Who Knows?’


pages: 199 words: 48,162

Capital Allocators: How the World’s Elite Money Managers Lead and Invest by Ted Seides

Albert Einstein, asset allocation, behavioural economics, business cycle, coronavirus, COVID-19, crowdsourcing, data science, deliberate practice, diversification, Everything should be made as simple as possible, fake news, family office, fixed income, high net worth, hindsight bias, impact investing, implied volatility, impulse control, index fund, Kaizen: continuous improvement, Lean Startup, loss aversion, Paradox of Choice, passive investing, Ralph Waldo Emerson, risk tolerance, Sharpe ratio, sovereign wealth fund, tail risk, The Wisdom of Crowds, Toyota Production System, zero-sum game

Each reference comes with their own bias and agenda, and allocators must take their expression of support with a grain of salt. Thorough allocators call names on a reference list despite the likelihood of bias in favor of the manager. I found it surprising how infrequently references get called, particularly for popular managers where allocators may rely on the wisdom of crowds. Occasionally, on-list references share that they are not that enthusiastic about the manager. If the few chosen references are not wildly enthusiastic and that information comes without a rationale as to why, the allocator may want to take a step back and dig deeper. The most important question an allocator asks of on-list references may be the one Kip McDaniel of Institutional Investor asks of every subject: “Who else should I talk to about this?”

” – Michael Batnick “We’re in the investing business, but it’s sort of like we’re in the fashion business. Skirts come up and down in our industry.” – Anthony Scaramucci “Great bubbles happen around great stories.” – Michael Novogratz “The market is a complex, adaptive system, which explains both why markets tend to be efficient – the wisdom of crowds – and why markets episodically go haywire.” – Michael Mauboussin “It’s not just the non-predictable regime shifts that cause abrupt moves in any financial instrument, it’s the over-reliance on short-term market financing to underpin positions.” – James Aitken “In times of easy money, a lot of stupid things work.


pages: 250 words: 88,762

The Logic of Life: The Rational Economics of an Irrational World by Tim Harford

activist fund / activist shareholder / activist investor, affirmative action, Albert Einstein, Andrei Shleifer, barriers to entry, behavioural economics, Berlin Wall, business cycle, colonial rule, company town, Daniel Kahneman / Amos Tversky, double entry bookkeeping, Dr. Strangelove, Edward Glaeser, en.wikipedia.org, endowment effect, European colonialism, experimental economics, experimental subject, George Akerlof, income per capita, invention of the telephone, Jane Jacobs, John von Neumann, Larry Ellison, law of one price, Martin Wolf, mutually assured destruction, New Economic Geography, new economy, Patri Friedman, plutocrats, Richard Florida, Richard Thaler, Ronald Reagan, Silicon Valley, spinning jenny, Steve Jobs, The Death and Life of Great American Cities, the market place, the strength of weak ties, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Tyler Cowen, women in the workforce, zero-sum game

That is not because the auction produces some odd psychological quirk. It’s because while the survey of the crowd will produce the average view of the value of coins, the auction will not. Instead, the auction automatically selects the highest bid, the crazier the better. The survey uncovers what New Yorker columnist James Surowiecki calls “the wisdom of crowds.” The auction, by contrast, finds the biggest sucker. Rational players, knowing this, would dramatically scale back their bids. They would reason like this: “I think the value of the coins in the jar is twenty dollars. So maybe I should bid eighteen dollars to leave some room for profit. But wait: Either I lose the auction, in which case it doesn’t matter what my bid was, or I win the auction, in which case a hundred other people in this room thought it was worth less than twenty dollars.

For example, when I learned how to write a decent book proposal and where to send it, all Stephen McGroarty got in repayment from me was a pint or two of Guinness, and possibly the vague sense that I owed him a favor. Another example: After I knew my book was to be published, I started to make a habit of attending book talks to pick up some tips for the forthcoming promotional tour. It cost me nothing at all to receive a lesson in how to give a book talk from James Surowiecki, author of The Wisdom of Crowds, at my local Barnes & Noble. It’s hard to imagine how he might try to charge soon-to-be authors to hear his book talks while letting mere potential buyers of his own tome through the doors for nothing. Neither service is as easy to package and market as a hot dog. That means there exist potentially publishable authors with lousy proposals and potentially eloquent authors who are insufficiently skilled in the art of book talks, but there isn’t anyone with two dollars in his pocket and an unfulfillable desire for a hot dog.

The age of rational poker: My sources for the Chris Ferguson story include my conversations with Ferguson around the 2005 World Series of Poker; Kaplan and Reagan, Aces and Kings; and James McManus, Positively Fifth Street (New York: Farrar, Straus & Giroux, 2003). McManus was in Las Vegas to write an article for Harper’s magazine and ended up at the final table with Cloutier and Ferguson. If I ask each of a large number: See James Surowiecki, The Wisdom of Crowds (Boston: Little, Brown, 2004). Even professional soccer players: Ignacio Palacios-Huerta, “Professionals Play Minimax,” Review of Economic Studies 70, no. 2(2003): 395–415, and Tim Harford, “Keep Them Guessing,” FT Magazine, June 17, 2006. It turns out that: “What Do Laboratory Experiments Tell Us About the Real World?


pages: 299 words: 91,839

What Would Google Do? by Jeff Jarvis

"World Economic Forum" Davos, 23andMe, Amazon Mechanical Turk, Amazon Web Services, Anne Wojcicki, AOL-Time Warner, barriers to entry, Berlin Wall, bike sharing, business process, call centre, carbon tax, cashless society, citizen journalism, clean water, commoditize, connected car, content marketing, credit crunch, crowdsourcing, death of newspapers, different worldview, disintermediation, diversified portfolio, don't be evil, Dunbar number, fake news, fear of failure, Firefox, future of journalism, G4S, Golden age of television, Google Earth, Googley, Howard Rheingold, informal economy, inventory management, Jeff Bezos, jimmy wales, John Perry Barlow, Kevin Kelly, Marc Benioff, Mark Zuckerberg, moral hazard, Network effects, new economy, Nicholas Carr, old-boy network, PageRank, peer-to-peer lending, post scarcity, prediction markets, pre–internet, Ronald Coase, Salesforce, search inside the book, Sheryl Sandberg, Silicon Valley, Skype, social graph, social software, social web, spectrum auction, speech recognition, Steve Jobs, the long tail, the medium is the message, The Nature of the Firm, the payments system, The Wisdom of Crowds, transaction costs, web of trust, WikiLeaks, Y Combinator, Zipcar

“We rely so much on the data and we do so much measurement that you don’t have to worry that your idea will get picked because you’re the favorite,” Mayer said. “Data is apolitical.” Google has faith in data because it has faith in us. When you take to heart the moral of James Surowiecki’s 2004 book, The Wisdom of Crowds, you must realize that your crowd—your users, customers, voters, students, audience, neighbors—is wise. The next questions should be: How do you capture and act on that wisdom? How do you listen? How do you enable them to share their wisdom with each other and with you? How do you help them make you smarter (and why should they bother)?

Air travel’s business model today is based on overselling seats, billing us for checking bags, charging for pillows and pretzels and just about everything they can think of but air, jamming planes to the point of torture, treating customers as prisoners who can be kept on runways for hours without the food and water an inmate is allowed, and withholding information—all the while raising prices. Google couldn’t fix that. No one could. But then I applied Google rules about connections and the wisdom of crowds with Zuckerberg’s law of elegant organization and my own first law and asked how travelers on planes, trains, and ships or in hotels and resorts could be given more control (of anything but the cockpit, of course). And I wondered, what if passengers on a plane were networked? What if a flight became a social experience with its own economy?

See vendor relationship management Waghorn, Rick, 56 Wales, Jimmy, 60, 87 Wall Street Journal, 129 Wal-Mart, 54–55, 101 Washlet, 181 Wattenberg, Laura, 233 Weinberger, David, 3, 82, 96–97, 137, 149, 232 Westlaw, 224 widgets, 36–37 Wikia, 60 Wikileaks.org, 92–93 Wikinomics (Tapscott), 113, 151, 225 Wikipedia communities and, 50 growth of, 66 mistakes in, 92–93 open-source and, 60 speed of, 106 wikitorials, 86–87 Williams, Evan, 105–6 Williams, Raymond, 63 Wilson, Fred, 35, 176, 189–92, 225, 237 Wine.com, 158 WineLibrary.TV, 157 The Winner Stands Alone (Coelho), 142 Wired, 33 wireless access, 166 airlines and, 182–83 wireless spectrum, 166 The Wisdom of Crowds (Surowiecki), 88 The Witch of Portobello (Coelho), 142–43 WNYC, 128 Wojcicki, Anne, 205 Wolf, Maryanne, 235 World Economic Forum, 48, 113 Wyman, Bob, 211 Yahoo, 5, 36, 58 China and, 99–100 communities and, 50 Yang, Jerry, 36 Y Combinator, 193 youth, 191–94, 212 YouTube, 6, 20, 33, 37 Zappos, 161 Zara, 103–4 Zazzle, 180 Zell, Sam, 129 zero-based budgeting, 79–80 Zillow, 75, 80, 187 Zipcar, 176 Zopa, 196 Zuckerberg, Mark, 4, 48–53, 94–95 About the Author Jeff Jarvis is the proprietor of one of the Web’s most popular and respected blogs about the internet and media, Buzzmachine.com.


pages: 407 words: 103,501

The Digital Divide: Arguments for and Against Facebook, Google, Texting, and the Age of Social Netwo Rking by Mark Bauerlein

Alvin Toffler, Amazon Mechanical Turk, Andrew Keen, business cycle, centre right, citizen journalism, collaborative editing, computer age, computer vision, corporate governance, crowdsourcing, David Brooks, digital divide, disintermediation, folksonomy, Frederick Winslow Taylor, Future Shock, Hacker News, Herbert Marcuse, Howard Rheingold, invention of movable type, invention of the steam engine, invention of the telephone, Jaron Lanier, Jeff Bezos, jimmy wales, Kevin Kelly, knowledge worker, late fees, Lewis Mumford, Mark Zuckerberg, Marshall McLuhan, means of production, meta-analysis, moral panic, Network effects, new economy, Nicholas Carr, PageRank, PalmPilot, peer-to-peer, pets.com, radical decentralization, Results Only Work Environment, Saturday Night Live, scientific management, search engine result page, semantic web, Silicon Valley, slashdot, social graph, social web, software as a service, speech recognition, Steve Jobs, Stewart Brand, technology bubble, Ted Nelson, the long tail, the strength of weak ties, The Wisdom of Crowds, Thorstein Veblen, web application, Yochai Benkler

Anyone can add a project, anyone can download and use the code, and new projects migrate from the edges to the center as a result of users putting them to work, an organic software adoption process relying almost entirely on viral marketing. The lesson: Network effects from user contributions are the key to market dominance in the Web 2.0 era. Blogging and the Wisdom of Crowds One of the most highly touted features of the Web 2.0 era is the rise of blogging. Personal home pages have been around since the early days of the Web, and the personal diary and daily opinion column around much longer than that, so just what is the fuss all about? At its most basic, a blog is just a personal home page in diary format.

Second, because the blogging community is so highly self-referential, bloggers paying attention to other bloggers magnify their visibility and power. The “echo chamber” that critics decry is also an amplifier. If it were merely an amplifier, blogging would be uninteresting. But like Wikipedia, blogging harnesses collective intelligence as a kind of filter. What James Suriowecki calls “the wisdom of crowds” comes into play, and much as PageRank produces better results than analysis of any individual document, the collective attention of the blogosphere selects for value. While mainstream media may see individual blogs as competitors, what is really unnerving is that the competition is with the blogosphere as a whole.

(“Most people assume the fights are going to be the left vs. the right,” Wales has said, “but it always is the reasonable versus the jerks.”) The jerks range from the Chinese government to the giant penis guy. But mostly they’re regular contributors who get upset about some hobbyhorse and have to be talked down or even shamed by their communities. Although he professes to hate phrases like “swarm intelligence” and “the wisdom of crowds,” Wales’s phenomenal success springs largely from his willingness to trust large aggregations of human beings to produce good outcomes through decentralized, marketlike mechanisms. He is suspicious of a priori planning and centralization, and he places a high value on freedom and independence for individuals.


pages: 218 words: 44,364

The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations by Ori Brafman, Rod A. Beckstrom

Atahualpa, barriers to entry, Burning Man, creative destruction, disintermediation, experimental economics, Firefox, Francisco Pizarro, jimmy wales, Kibera, Lao Tzu, Network effects, peer-to-peer, pez dispenser, shareholder value, Silicon Valley, Skype, The Wisdom of Crowds, union organizing

BECKSTROM ADVANCE P R A I S E FOR THE STARFISH AND THE SPIDER "The Starfish and the Spider is a compelling and important book, rich with examples of how decentralization is fundamental to the right environment—one that promotes equal access, rich connections, and 'skin in the game' for participants." — P I E R R E O M I D Y A R , CEO, Omidyar Network; f o u n d e r and chairman, eBay Inc. "The Starfish and the Spider, like Blink, The Tipping Point, and The Wisdom of Crowds before it, showed me a provocative new way to look at the world and at business. It's also fun to read!" — R O B I N W O L A N E R , author of Naked in the Boardroom "A fantastic read. Constantly weaving stories and connections. You'll never see the world the same way again." —NICHOL AS J.

[It has] not only stimulated my thinking, but as a result of the reading, I proposed ten action points for my own organization." —PROFESSOR K L A U S SCHWAB, executive chairman, World Economic Forum More advance praise for The Starfish and the Spider "From eBay to Google, Skype to craigs list, inspired individuals are catalyzing a marked shift from hierarchies to the wisdom of crowds. On and Rod provide sharp insights into how to avoid becoming the next victim of this market populism, or, if you arc so inclined, the strategies to take on those vulnerable incumbents." —Randy Komisar, author; Stanford professor; partner, Kleiner Perkins Caufield & Byers "Highly readable and highly entertaining.


pages: 807 words: 154,435

Radical Uncertainty: Decision-Making for an Unknowable Future by Mervyn King, John Kay

Airbus A320, Alan Greenspan, Albert Einstein, Albert Michelson, algorithmic trading, anti-fragile, Antoine Gombaud: Chevalier de Méré, Arthur Eddington, autonomous vehicles, availability heuristic, banking crisis, Barry Marshall: ulcers, battle of ideas, Bear Stearns, behavioural economics, Benoit Mandelbrot, bitcoin, Black Swan, Boeing 737 MAX, Bonfire of the Vanities, Brexit referendum, Brownian motion, business cycle, business process, capital asset pricing model, central bank independence, collapse of Lehman Brothers, correlation does not imply causation, credit crunch, cryptocurrency, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, DeepMind, demographic transition, discounted cash flows, disruptive innovation, diversification, diversified portfolio, Donald Trump, Dutch auction, easy for humans, difficult for computers, eat what you kill, Eddington experiment, Edmond Halley, Edward Lloyd's coffeehouse, Edward Thorp, Elon Musk, Ethereum, Eugene Fama: efficient market hypothesis, experimental economics, experimental subject, fear of failure, feminist movement, financial deregulation, George Akerlof, germ theory of disease, Goodhart's law, Hans Rosling, Helicobacter pylori, high-speed rail, Ignaz Semmelweis: hand washing, income per capita, incomplete markets, inflation targeting, information asymmetry, invention of the wheel, invisible hand, Jeff Bezos, Jim Simons, Johannes Kepler, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Snow's cholera map, John von Neumann, Kenneth Arrow, Kōnosuke Matsushita, Linda problem, Long Term Capital Management, loss aversion, Louis Pasteur, mandelbrot fractal, market bubble, market fundamentalism, military-industrial complex, Money creation, Moneyball by Michael Lewis explains big data, Monty Hall problem, Nash equilibrium, Nate Silver, new economy, Nick Leeson, Northern Rock, nudge theory, oil shock, PalmPilot, Paul Samuelson, peak oil, Peter Thiel, Philip Mirowski, Phillips curve, Pierre-Simon Laplace, popular electronics, power law, price mechanism, probability theory / Blaise Pascal / Pierre de Fermat, quantitative trading / quantitative finance, railway mania, RAND corporation, reality distortion field, rent-seeking, Richard Feynman, Richard Thaler, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Solow, Ronald Coase, sealed-bid auction, shareholder value, Silicon Valley, Simon Kuznets, Socratic dialogue, South Sea Bubble, spectrum auction, Steve Ballmer, Steve Jobs, Steve Wozniak, Suez crisis 1956, Tacoma Narrows Bridge, Thales and the olive presses, Thales of Miletus, The Chicago School, the map is not the territory, The Market for Lemons, The Nature of the Firm, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Bayes, Thomas Davenport, Thomas Malthus, Toyota Production System, transaction costs, ultimatum game, urban planning, value at risk, world market for maybe five computers, World Values Survey, Yom Kippur War, zero-sum game

Nor do they intend to bet on the outcome, or to find out the name of the winner when the finishing list is posted. When decisions do matter, rational people delegate them to those who have, or are willing to invest in acquiring, relevant information and the capacity to interpret that information. For all that has recently been said about ‘the wisdom of crowds’, the authors prefer to fly with airlines which rely on the services of skilled and experienced pilots, rather than those who entrust the controls to the average opinion of the passengers. 13 There is no general theory of how best to make decisions. Much of the academic literature on decision-making under uncertainty tries to frame the challenge as a puzzle.

Our ability as humans to deal with radical uncertainty is the product of our much greater capacity for social learning and greater ability to communicate relative to other species. We are social animals; we manage radical uncertainty in a context determined by the knowledge we have acquired through education and experience, and we make important decisions in conjunction with others – friends, family, colleagues and advisers. Reference to the ‘wisdom of crowds’ makes an important point while missing another. The crowd always knows more than any individual, but what is valuable is the aggregate of its knowledge, not the average of its knowledge. Given the overwhelmingly large body of knowledge and experience which makes up our collective intelligence, and the obvious necessity for specialisation, the rational person following the requirements of logic and reason answers most questions about what will happen in the future or what will be the consequence of particular actions by saying ‘I do not know – if it matters I will try to find out’.

., ‘Interview: Bruce Sterling on the Convergence of Humans and Machines’ (22 Feb 2015) < https://www.nextnature.net/2015/02/interview-bruce-sterling/ > (accessed 14 May 2018) Stevenson, M. T., ‘Assessing Risk Assessment in Action’, Minnesota Law Review , Vol. 103, No. 1 (2019), 303–84 Stevenson, R. L., ‘The Day After To-Morrow’, The Contemporary Review , Vol. 51 (1887), 472–9 Surowiecki, J., The Wisdom of Crowds (Boston: Little Brown, 2004) Swanson, I., ‘Revealed: Final Cost of Edinburgh Tram Scheme Will be £1 Billion’, The Scotsman (13 Dec 2017) Taft, J. G., ‘Why Knight Capital Was Saved and Lehman Brothers Failed’, Forbes (20 Aug 2012) < https://www.forbes.com/sites/advisor/2012/08/20/why-knight-capital-was-saved-and-lehman-brothers-failed/ > (accessed 14 Jan 2019) Taleb, N.


pages: 405 words: 109,114

Unfinished Business by Tamim Bayoumi

Alan Greenspan, algorithmic trading, Asian financial crisis, bank run, banking crisis, Basel III, battle of ideas, Bear Stearns, behavioural economics, Ben Bernanke: helicopter money, Berlin Wall, Big bang: deregulation of the City of London, book value, Bretton Woods, British Empire, business cycle, buy and hold, capital controls, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, currency manipulation / currency intervention, currency peg, Doha Development Round, facts on the ground, Fall of the Berlin Wall, financial deregulation, floating exchange rates, full employment, Glass-Steagall Act, Greenspan put, hiring and firing, housing crisis, inflation targeting, junk bonds, Just-in-time delivery, Kenneth Rogoff, liberal capitalism, light touch regulation, London Interbank Offered Rate, Long Term Capital Management, market bubble, Martin Wolf, moral hazard, oil shale / tar sands, oil shock, price stability, prisoner's dilemma, profit maximization, quantitative easing, race to the bottom, random walk, reserve currency, Robert Shiller, Rubik’s Cube, Savings and loan crisis, savings glut, technology bubble, The Great Moderation, The Myth of the Rational Market, the payments system, The Wisdom of Crowds, too big to fail, trade liberalization, transaction costs, value at risk

Put differently, if it is known to investors that (say) shares in General Motors are undervalued and will go up soon, then investors will bid up the price immediately until it reaches this fair value. While the theory and its tests come in softer and harder forms, the idea is that no individual investor or policy institution can beat the wisdom of crowds. This has implications for short- and long-term behavior. The short-term prediction is that day-to-day movements in prices of stocks and bonds are unpredictable except to the extent that they reflect new information. Clearly, if General Motors announces profits that are higher than investors expect then the price of its shares will increase.

The basic issue is that far-sighted and well-informed investors will project the dynamics of the market and realize that the future path of assets prices is unstable and will at some point collapse. As a result, they will never start down the path towards a bubble as they understand that it is inherently unstable. This inability to model “rational” asset bubbles helped fuel the popularity of the efficient markets hypothesis—in which asset prices reflected the wisdom of crowds and were thus always accurate—that helped to lull policymakers into underestimating the risks emanating from growing financial imbalances in the United States and European economies. More generally, the hyper-rational and far-seeing “homo economicus” has been elevated from a useful tool to something closer to a litmus test for economic modeling.

Indeed, even theoretical physics has accepted for around a century the existence of general relativity and quantum mechanics, two apparently incompatible approaches. There is also a major issue as to whether a coherent view of the long-run path for the economy can be constructed. On a practical level, it assumes that individuals acting through the wisdom of crowds understand an awful lot about the economy. On a theoretical level, as discussed in an earlier chapter, the existence of “unknown unknowns” may make it impossible to calculate a well-defined future. In this case, ad hoc rules of thumb may be the best available option. The long-run may truly be a quantum process in which unexpected events cause shifts from one view of the world to another.


pages: 219 words: 63,495

50 Future Ideas You Really Need to Know by Richard Watson

23andMe, 3D printing, access to a mobile phone, Albert Einstein, Alvin Toffler, artificial general intelligence, augmented reality, autonomous vehicles, BRICs, Buckminster Fuller, call centre, carbon credits, Charles Babbage, clean water, cloud computing, collaborative consumption, computer age, computer vision, crowdsourcing, dark matter, dematerialisation, Dennis Tito, digital Maoism, digital map, digital nomad, driverless car, Elon Musk, energy security, Eyjafjallajökull, failed state, Ford Model T, future of work, Future Shock, gamification, Geoffrey West, Santa Fe Institute, germ theory of disease, global pandemic, happiness index / gross national happiness, Higgs boson, high-speed rail, hive mind, hydrogen economy, Internet of things, Jaron Lanier, life extension, Mark Shuttleworth, Marshall McLuhan, megacity, natural language processing, Neil Armstrong, Network effects, new economy, ocean acidification, oil shale / tar sands, pattern recognition, peak oil, personalized medicine, phenotype, precision agriculture, private spaceflight, profit maximization, RAND corporation, Ray Kurzweil, RFID, Richard Florida, Search for Extraterrestrial Intelligence, self-driving car, semantic web, Skype, smart cities, smart meter, smart transportation, space junk, statistical model, stem cell, Stephen Hawking, Steve Jobs, Steven Pinker, Stewart Brand, strong AI, Stuxnet, supervolcano, synthetic biology, tech billionaire, telepresence, The Wisdom of Crowds, Thomas Malthus, Turing test, urban decay, Vernor Vinge, Virgin Galactic, Watson beat the top human players on Jeopardy!, web application, women in the workforce, working-age population, young professional

This is slowly changing, but until we achieve a shift in attitudes relating to who has access to what and in what format, this will act against not only the generation and transmission of knowledge by small groups of patients, but will also prevent the occurrence of larger network effects (i.e. “the wisdom of crowds”). “This artificial distinction between a consumer and a producer is dissolving, I call it the participant economy. Web 2.0 is about people.” David Sifry, Technorati But does user-generated medicine or “open-source health” really have a future? On the one hand, you’d think that privacy issues alone would prevent any meaningful exchange of knowledge, but this doesn’t seem to be an issue.

Digitalization, for example, means that many products and experiences can now be personalized to suit the whims and wishes of individual users. Your problem is mine Open innovation, an idea originally pioneered by the open-source software community, has the potential to radically change how and where our problems are solved. In one sense the wisdom of crowds is no different from old-fashioned suggestion boxes, but the big difference is scale and to some extent speed. With enough networked minds, all problems become shallow. Linked to this idea is another, namely collaborative consumption. This is the use of connecting technologies to allow people to share and exchange all kinds of physical and digital goods, services, assets and skills.


pages: 533

Future Politics: Living Together in a World Transformed by Tech by Jamie Susskind

3D printing, additive manufacturing, affirmative action, agricultural Revolution, Airbnb, airport security, algorithmic bias, AlphaGo, Amazon Robotics, Andrew Keen, Apollo Guidance Computer, artificial general intelligence, augmented reality, automated trading system, autonomous vehicles, basic income, Bertrand Russell: In Praise of Idleness, Big Tech, bitcoin, Bletchley Park, blockchain, Boeing 747, brain emulation, Brexit referendum, British Empire, business process, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, cashless society, Cass Sunstein, cellular automata, Citizen Lab, cloud computing, commons-based peer production, computer age, computer vision, continuation of politics by other means, correlation does not imply causation, CRISPR, crowdsourcing, cryptocurrency, data science, deep learning, DeepMind, digital divide, digital map, disinformation, distributed ledger, Donald Trump, driverless car, easy for humans, difficult for computers, Edward Snowden, Elon Musk, en.wikipedia.org, end-to-end encryption, Erik Brynjolfsson, Ethereum, ethereum blockchain, Evgeny Morozov, fake news, Filter Bubble, future of work, Future Shock, Gabriella Coleman, Google bus, Google X / Alphabet X, Googley, industrial robot, informal economy, intangible asset, Internet of things, invention of the printing press, invention of writing, Isaac Newton, Jaron Lanier, John Markoff, Joseph Schumpeter, Kevin Kelly, knowledge economy, Large Hadron Collider, Lewis Mumford, lifelogging, machine translation, Metcalfe’s law, mittelstand, more computing power than Apollo, move fast and break things, natural language processing, Neil Armstrong, Network effects, new economy, Nick Bostrom, night-watchman state, Oculus Rift, Panopticon Jeremy Bentham, pattern recognition, payday loans, Philippa Foot, post-truth, power law, price discrimination, price mechanism, RAND corporation, ransomware, Ray Kurzweil, Richard Stallman, ride hailing / ride sharing, road to serfdom, Robert Mercer, Satoshi Nakamoto, Second Machine Age, selection bias, self-driving car, sexual politics, sharing economy, Silicon Valley, Silicon Valley startup, Skype, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, smart contracts, Snapchat, speech recognition, Steve Bannon, Steve Jobs, Steve Wozniak, Steven Levy, tech bro, technological determinism, technological singularity, technological solutionism, the built environment, the Cathedral and the Bazaar, The Structural Transformation of the Public Sphere, The Wisdom of Crowds, Thomas L Friedman, Tragedy of the Commons, trolley problem, universal basic income, urban planning, Watson beat the top human players on Jeopardy!, work culture , working-age population, Yochai Benkler

One group, called the counters, say that as a matter of mathematical logic a large and more diverse group of people will answer political questions better than a smaller group—even one composed of experts.55 This line of thinking can be traced back to the seventeenth-century Dutch thinker Baruch Spinoza, who believed that ‘it is almost impossible that the majority of a people, especially if it be a large one, should agree in an i­ rrational design.’56 Spinoza’s conviction was shared by the Marquis de Condorcet, the eighteenth-century philosopher and mathematician whose famous Jury Theorem holds, in basic terms, that if a large group votes on a yes-or-no issue, the majority of voters are virtually certain to vote for the correct answer as long as: (a) the median voter is better than random at choosing correct answers, (b) voters vote independently of each other, and (c) voters vote sincerely rather than strategically. These days, this phenomenon is referred to as the wisdom of crowds.57 It explains the hoary old tale in which the average answer of 800 participants in a competition OUP CORRECTED PROOF – FINAL, 30/05/18, SPi РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Dream of Democracy 225 to guess the weight of an ox was within one pound of the ­correct number.58 Another group of theorists, called the talkers, say that democracy is more than mere aggregation of individual opinions.

And in a Wiki Democracy we would not merely be asked to say yes or no to a set of pre-ordained questions decided by someone else; instead we would have the chance to shape the agenda ourselves in a richer and more meaningful way.Wiki Democracy also enjoys some of the same epistemic advantages of Direct Democracy, in that it would draw on the wisdom of crowds generally and (where appropriate) experts in particular. In a full-blown Wiki Democracy, as in a Direct Democracy, there would have to be flexibility in how and to what extent individuals OUP CORRECTED PROOF – FINAL, 26/05/18, SPi РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS DEMOCRACY IN THE FUTURE 245 contributed.The policymaking process could be broken down into various parts (diagnosis, framing, data-collection, drafting and refining legislation, and so forth) and each part could be guided by the groups and individuals most willing or best placed to contribute.54 In a world of code-ified law (see chapter six) the code/law could theoretically be reprogrammable by the public at large, or by persons or AI systems delegated to undertake the task for them.

Josiah Ober, Democracy and Knowledge: Innovation and Learning in Classical Athens (Princeton: Princeton University Press, 2008). 55. See Landemore, Democratic Reason; Philip E. Tetlock, Expert Political Judgment: How Good Is It? How Can We Know? (Princeton: Princeton University Press, 2006). 56. Baruch Spinoza, Tractatus Theologico-Politicus (1670), cited in Landemore, Democratic Reason, 67. 57. James Surowiecki, The Wisdom of Crowds: Why the Many are Smarter than the Few (London: Abacus, 2005). 58. Landemore, Democratic Reason, 157. 59. Jürgen Habermas, cited in Landemore, Democratic Reason, xvii; see also Landemore, Democratic Reason, 97. 60. Tocqueville, Democracy in America, 70. 61. Rousseau, Social Contract, 64. 62.


pages: 393 words: 115,217

Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries by Safi Bahcall

accounting loophole / creative accounting, Alan Greenspan, Albert Einstein, AOL-Time Warner, Apollo 11, Apollo 13, Apple II, Apple's 1984 Super Bowl advert, Astronomia nova, behavioural economics, Boeing 747, British Empire, Cass Sunstein, Charles Lindbergh, Clayton Christensen, cognitive bias, creative destruction, disruptive innovation, diversified portfolio, double helix, Douglas Engelbart, Douglas Engelbart, Dunbar number, Edmond Halley, Gary Taubes, Higgs boson, hypertext link, industrial research laboratory, invisible hand, Isaac Newton, Ivan Sutherland, Johannes Kepler, Jony Ive, knowledge economy, lone genius, Louis Pasteur, Mark Zuckerberg, Menlo Park, Mother of all demos, Murray Gell-Mann, PageRank, Peter Thiel, Philip Mirowski, Pierre-Simon Laplace, power law, prediction markets, pre–internet, Ralph Waldo Emerson, RAND corporation, random walk, reality distortion field, Richard Feynman, Richard Thaler, Sheryl Sandberg, side project, Silicon Valley, six sigma, stem cell, Steve Jobs, Steve Wozniak, synthetic biology, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tim Cook: Apple, tulip mania, Wall-E, wikimedia commons, yield management

What Bush did, and why he did it, came right back to one of those eight greatest ideas of physics: phase transitions. In this book, I’ll show you how the science of phase transitions suggests a surprising new way of thinking about the world around us—about the mysteries of group behavior. We will see why good teams will kill great ideas, why the wisdom of crowds becomes the tyranny of crowds when the stakes are high, and why the answers to these questions can be found in a glass of water. I’ll describe the science briefly (skipping the boring stuff). And then we’ll see how small changes in structure, rather than culture, can transform the behavior of groups, the same way a small change in temperature can transform rigid ice to flowing water.

* * * Loonshot Franchise Widely dismissed or ridiculed idea 1922 A 12-year-old patient with diabetes is treated with ground-up pancreas extract Insulin 1935 An 80-pound payload is accelerated to 500 miles per hour through rocket propulsion Long-range ballistic missiles 1961 A 32-year-old former milk-truck driver plays a metrosexual British spy who saves the world James Bond 1976 A script titled The Adventures of Luke Starkiller is green-lit Star Wars Phase transition Sudden transformation in system behavior, as one or more control parameters cross a critical threshold Water From liquid to solid, as temperature decreases Cars on highways From smooth flow to jammed flow, as car density increases Fires in forests From contained to uncontrolled, as wind speed increases Individuals in companies From a focus on loonshots to a focus on careers, as size of company increases * * * Which brings us to the importance of being emergent—or, at least, understanding emergence. It can help us capture the benefits of diversity while reducing the risk of collective disasters. We want to benefit from the wisdom of crowds while reducing the risk of market crashes. We want to benefit from a plurality of beliefs while reducing the risk of religious wars. Over the coming chapters, we will apply Boyle-style science to help us understand the collective behaviors of individuals in companies, much as Smith applied Boyle-style science (not Newton-style) to help us understand the collective behaviors of individuals in markets.

A superbomb made from the element hafnium, discovered, allegedly, by a physicist experimenting with a dental x-ray machine. A plan for achieving nuclear fusion through rapidly collapsing bubbles inside liquids (a modified cleaning fluid was used). A prediction market where investors could bet on the location of the next terrorist event, in order to tap into the “wisdom of crowds.” (The project was scrapped for what might be called bad taste.) Other DARPA loonshots have transformed industries or created new academic disciplines. The early computer network ARPANET evolved into the internet. A satellite-based geolocation system evolved first into military GPS, then the consumer GPS used in nearly every car and smartphone.


pages: 397 words: 110,130

Smarter Than You Think: How Technology Is Changing Our Minds for the Better by Clive Thompson

4chan, A Declaration of the Independence of Cyberspace, Andy Carvin, augmented reality, barriers to entry, behavioural economics, Benjamin Mako Hill, butterfly effect, citizen journalism, Claude Shannon: information theory, compensation consultant, conceptual framework, context collapse, corporate governance, crowdsourcing, Deng Xiaoping, digital rights, discovery of penicillin, disruptive innovation, Douglas Engelbart, Douglas Engelbart, drone strike, Edward Glaeser, Edward Thorp, en.wikipedia.org, Evgeny Morozov, experimental subject, Filter Bubble, folksonomy, Freestyle chess, Galaxy Zoo, Google Earth, Google Glasses, Gunnar Myrdal, guns versus butter model, Henri Poincaré, hindsight bias, hive mind, Howard Rheingold, Ian Bogost, information retrieval, iterative process, James Bridle, jimmy wales, John Perry Barlow, Kevin Kelly, Khan Academy, knowledge worker, language acquisition, lifelogging, lolcat, Mark Zuckerberg, Marshall McLuhan, Menlo Park, Netflix Prize, Nicholas Carr, Panopticon Jeremy Bentham, patent troll, pattern recognition, pre–internet, public intellectual, Richard Feynman, Ronald Coase, Ronald Reagan, Rubik’s Cube, sentiment analysis, Silicon Valley, Skype, Snapchat, Socratic dialogue, spaced repetition, superconnector, telepresence, telepresence robot, The future is already here, The Nature of the Firm, the scientific method, the strength of weak ties, The Wisdom of Crowds, theory of mind, transaction costs, Twitter Arab Spring, Two Sigma, Vannevar Bush, Watson beat the top human players on Jeopardy!, WikiLeaks, X Prize, éminence grise

She’s not sure precisely how many fans were involved overall—hundreds, she guesses—but the group was diverse enough that it tapped into a broad range of skills. “There were some very tech-savvy people on the chat, so when we started asking for something really hard they could say, ‘Okay, that’s technologically feasible and that’s not.’” This breadth of participation is key to what author James Surowiecki dubbed “the wisdom of crowds.” Crowd wisdom as a scientific phenomenon was first explored in 1906 when the British scientist Francis Galton visited a county fair and observed a contest to guess the weight of an ox. About eight hundred fair attendees put in guesses. Galton expected that compared to the guess of an expert judge of oxen, the crowd of attendees would be far off the mark.

“If you wanted to read a 3000 word fic”: Maciej Cegłowski, “The Fans Are All Right,” Pinboard Blog, accessed March 24, 2013, blog.pinboard.in/2011/10/the_fans_are_all_right/. “These people,” he wrote later, “do not waste time”: Ibid. “the crowd’s judgment was essentially perfect”: James Surowiecki, The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies, and Nations (New York: Doubleday, 2004), xiii. the spectacular collapse of the Los Angeles Times’s “wikitorial”: Dan Glaister, “LA Times ‘wikitorial’ gives editors red faces,” The Guardian, June 21, 2005, accessed March 25, 2013, www.guardian.co.uk/technology/2005/jun/22/media.pressandpublishing.

My writing here also draws on a column I previously wrote on this subject: “Clive Thompson on the Power of Introversion,” Wired, April 2012, accessed March 24, 2013, www.wired.com/magazine/2012/03/st_thompson_introvert/. A 2011 study took several virtual groups: Jan Lorenza, Heiko Rauhut, Frank Schweitzera, and Dirk Helbing, “How Social Influence Can Undermine the Wisdom of Crowd Effect,” PNAS 108, no. 22 (May 31, 2011): 9020–25, accessed March 24, 2013, www.pnas.org/content/108/22/9020.full.pdf#page=1&view=FitH. The “rich get richer” problem has been investigated extensively by the network scientist Duncan J. Watts; he writes about his research in “Is Justin Timberlake a Product of Cumulative Advantage?”


pages: 281 words: 71,242

World Without Mind: The Existential Threat of Big Tech by Franklin Foer

artificial general intelligence, back-to-the-land, Berlin Wall, big data - Walmart - Pop Tarts, Big Tech, big-box store, Buckminster Fuller, citizen journalism, Colonization of Mars, computer age, creative destruction, crowdsourcing, data is the new oil, data science, deep learning, DeepMind, don't be evil, Donald Trump, Double Irish / Dutch Sandwich, Douglas Engelbart, driverless car, Edward Snowden, Electric Kool-Aid Acid Test, Elon Musk, Evgeny Morozov, Fall of the Berlin Wall, Filter Bubble, Geoffrey Hinton, global village, Google Glasses, Haight Ashbury, hive mind, income inequality, intangible asset, Jeff Bezos, job automation, John Markoff, Kevin Kelly, knowledge economy, Law of Accelerating Returns, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, means of production, move fast and break things, new economy, New Journalism, Norbert Wiener, off-the-grid, offshore financial centre, PageRank, Peace of Westphalia, Peter Thiel, planetary scale, Ray Kurzweil, scientific management, self-driving car, Silicon Valley, Singularitarianism, software is eating the world, Steve Jobs, Steven Levy, Stewart Brand, strong AI, supply-chain management, TED Talk, the medium is the message, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas L Friedman, Thorstein Veblen, Upton Sinclair, Vernor Vinge, vertical integration, We are as Gods, Whole Earth Catalog, yellow journalism

But if you listen hard to the titans of tech, that’s not the worldview that emerges. In fact, it is something much closer to the opposite of a libertarian’s veneration of the heroic, solitary individual. The big tech companies believe we’re fundamentally social beings, born to collective existence. They invest their faith in the network, the wisdom of crowds, collaboration. They harbor a deep desire for the atomistic world to be made whole. By stitching the world together, they can cure its ills. Rhetorically, the tech companies gesture toward individuality—to the empowerment of the “user”—but their worldview rolls over it. Even the ubiquitous invocation of users is telling, a passive, bureaucratic description of us.

Facebook was hailed as a mechanism that would help diminish the importance of clubbable gasbag pundits; Amazon would bust up the cartel of effete New York book publishers. This critique was not purely an exercise in denunciation. It was coupled with an alternative vision of society, a vision of amateurs producing knowledge for the joy of it, a faith in the wisdom of crowds. Silicon Valley views its role in history as that of the disruptive agent that shatters the grip of the sclerotic, self-perpetuating mediocrity that constitutes the American elite. On the surface, the tech companies seem aware of the danger that they might repeat the sins of the very cohort they critique.


pages: 312 words: 93,504

Common Knowledge?: An Ethnography of Wikipedia by Dariusz Jemielniak

Andrew Keen, barriers to entry, Benevolent Dictator For Life (BDFL), citation needed, collaborative consumption, collaborative editing, commons-based peer production, conceptual framework, continuous integration, crowdsourcing, Debian, deskilling, digital Maoism, disinformation, en.wikipedia.org, Filter Bubble, Free Software Foundation, Gabriella Coleman, Google Glasses, Guido van Rossum, Hacker Ethic, hive mind, Internet Archive, invisible hand, Jaron Lanier, jimmy wales, job satisfaction, Julian Assange, knowledge economy, knowledge worker, Menlo Park, moral hazard, online collectivism, pirate software, RFC: Request For Comment, Richard Stallman, selection bias, Silicon Valley, Skype, slashdot, social software, Stewart Brand, the Cathedral and the Bazaar, The Hackers Conference, The Nature of the Firm, the strength of weak ties, The Wisdom of Crowds, transaction costs, Wayback Machine, WikiLeaks, wikimedia commons, Wikivoyage, Yochai Benkler, zero-sum game

He also does not see the liberation in the new modes of knowledge production and the demise of the traditional ones (Scott et al., 1994). Wikipedia encompasses the capitalist mode of production and is the avant-garde of the emerging informational-communal approach (Barbrook, 2000; Hardt & Negri, 2001; O’Neil, 2011a; Firer-Blaess & Fuchs, 2013). Also, Keen apparently ignores the contexts in which “the wisdom of crowds” is particularly effective (Surowiecki, 2004) and seems to believe the Taylorist divide—some think and give orders, and others physically work and are the passive recipients of morsels of knowledge graciously given by the order givers—is still effective (Blackler, 1995). Moreover, J. Lanier’s and Keen’s critique of Wikipedia assumes that the multiple authorship of Wikipedia articles dilutes authors’ intellect and individuality and reduces them to a sort of a smart mob, composed of anonymous, chaotic, and contingent passersby, heavily relying on free-riding (R.

Wikipedia. Retrieved from http://en.wikipedia .org/w/index.php?title=Kiel&diff=2839601&oldid=2838532 Kim, S. (2002). Participative management and job satisfaction: Lessons for management leadership. Public Administration Review, 62(2), 231–241. Kittur, A., & Kraut, R. E. (2008). Harnessing the wisdom of crowds in Wikipedia: Quality through coordination. In CSCW ’08: Proceedings of the 2008 ACM Conference on Computer Supported Cooperative Work (pp. 37–46). New York: ACM. Kittur, A., Chi, E., Pendleton, B. A., Suh, B., & Mytkowicz, T. (2007, April 28–May 3). Power of the few vs. wisdom of the crowd: Wikipedia and the rise of the bourgeoisie.

H. (2011). Understanding sustained participation in transactional virtual communities. Decision Support Systems, 53(1), 12–22. Sundin, O. (2011). Janitors of knowledge: Constructing knowledge in the everyday life of Wikipedia editors. Journal of Documentation, 67(5), 840–862. Surowiecki, J. (2004). The wisdom of crowds. New York: Anchor Books. Swartz, A. (2006, September 4). Who writes Wikipedia? Raw Thought blog. Retrieved from http://www.aaronsw.com/weblog/whowriteswikipedia Szymanski, L. A., Devlin, A. S., Chrisler, J. C., & Vyse, S. A. (1993). Gender role and attitudes toward rape in male and female college students.


pages: 387 words: 119,409

Work Rules!: Insights From Inside Google That Will Transform How You Live and Lead by Laszlo Bock

Abraham Maslow, Abraham Wald, Airbnb, Albert Einstein, AltaVista, Atul Gawande, behavioural economics, Black Swan, book scanning, Burning Man, call centre, Cass Sunstein, Checklist Manifesto, choice architecture, citizen journalism, clean water, cognitive load, company town, correlation coefficient, crowdsourcing, Daniel Kahneman / Amos Tversky, deliberate practice, en.wikipedia.org, experimental subject, Fairchild Semiconductor, Frederick Winslow Taylor, future of work, Google Earth, Google Glasses, Google Hangouts, Google X / Alphabet X, Googley, helicopter parent, immigration reform, Internet Archive, Kevin Roose, longitudinal study, Menlo Park, mental accounting, meta-analysis, Moneyball by Michael Lewis explains big data, nudge unit, PageRank, Paul Buchheit, power law, Ralph Waldo Emerson, Rana Plaza, random walk, Richard Thaler, Rubik’s Cube, self-driving car, shareholder value, Sheryl Sandberg, side project, Silicon Valley, six sigma, statistical model, Steve Ballmer, Steve Jobs, Steven Levy, Steven Pinker, survivorship bias, Susan Wojcicki, TaskRabbit, The Wisdom of Crowds, Tony Hsieh, Turing machine, Wayback Machine, winner-take-all economy, Y2K

Evaluation is necessary to distribute finite resources, like salary increases or bonus dollars. Development is just as necessary so people grow and improve.”121 If you want people to grow, don’t have those two conversations at the same time. Make development a constant back-and-forth between you and your team members, rather than a year-end surprise. The wisdom of crowds… it’s not just for recruiting anymore! We learned in chapter 5 that we make better hiring decisions about potential employees by relying on input from a crowd of people. The same principle holds for coaching and evaluating existing employees.122 Going back to my team member Sam, I saw only a portion of his work, so he legitimately could argue that I didn’t understand the full context of his performance.

By now you’ll guess that promotion decisions, like rating decisions, are made by committees. They review people who are up for promotion and calibrate them against promoted people from prior years and well-defined standards, to ensure fairness. And it wouldn’t be Google if we didn’t also rely on the wisdom of crowds. Peer feedback is an essential part of the technical promotion packet that committees review. There’s just one other twist. Googlers working in engineering or product management can nominate themselves for promotion.xlv Interestingly enough, we found that women are less likely to nominate themselves for promotion, but that when they do, they are promoted at slightly higher rates than men.

xxx For example, Scott Page of the University of Michigan has shown that averaging the guesses of President Obama’s finance team about what financial markets will do is more accurate than the analysis put out by a small group of economists at the Federal Reserve. On Who Wants to Be a Millionaire, asking the audience gets you the right answer 95 percent of the time, according to former host Regis Philbin. And Google’s PageRank, an algorithm that prioritizes search results, relies heavily on the wisdom of crowds. xxxi Culture here refers specifically to the attributes described earlier in the chapter, including conscientiousness, comfort with ambiguity, etc. It’s also about broadening the kinds of people who work at Google and avoiding homogeneity. xxxii These are called “exploding offers” because the offer goes away (explodes) if not accepted by a certain date.


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Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown by Philip Mirowski

"there is no alternative" (TINA), Adam Curtis, Alan Greenspan, Alvin Roth, An Inconvenient Truth, Andrei Shleifer, asset-backed security, bank run, barriers to entry, Basel III, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, Bernie Sanders, Black Swan, blue-collar work, bond market vigilante , bread and circuses, Bretton Woods, Brownian motion, business cycle, capital controls, carbon credits, Carmen Reinhart, Cass Sunstein, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, constrained optimization, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, dark matter, David Brooks, David Graeber, debt deflation, deindustrialization, democratizing finance, disinformation, do-ocracy, Edward Glaeser, Eugene Fama: efficient market hypothesis, experimental economics, facts on the ground, Fall of the Berlin Wall, financial deregulation, financial engineering, financial innovation, Flash crash, full employment, George Akerlof, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Greenspan put, Hernando de Soto, housing crisis, Hyman Minsky, illegal immigration, income inequality, incomplete markets, information asymmetry, invisible hand, Jean Tirole, joint-stock company, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kickstarter, knowledge economy, l'esprit de l'escalier, labor-force participation, liberal capitalism, liquidity trap, loose coupling, manufacturing employment, market clearing, market design, market fundamentalism, Martin Wolf, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Naomi Klein, Nash equilibrium, night-watchman state, Northern Rock, Occupy movement, offshore financial centre, oil shock, Pareto efficiency, Paul Samuelson, payday loans, Philip Mirowski, Phillips curve, Ponzi scheme, Post-Keynesian economics, precariat, prediction markets, price mechanism, profit motive, public intellectual, quantitative easing, race to the bottom, random walk, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, savings glut, school choice, sealed-bid auction, search costs, Silicon Valley, South Sea Bubble, Steven Levy, subprime mortgage crisis, tail risk, technoutopianism, The Chicago School, The Great Moderation, the map is not the territory, The Myth of the Rational Market, the scientific method, The Theory of the Leisure Class by Thorstein Veblen, The Wisdom of Crowds, theory of mind, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, Tobin tax, tontine, too big to fail, transaction costs, Tyler Cowen, vertical integration, Vilfredo Pareto, War on Poverty, Washington Consensus, We are the 99%, working poor

First and foremost, neoliberalism masquerades as a radically populist philosophy, one that begins with a set of philosophical theses about knowledge and its relationship to society. It seems at first to be a radical leveling philosophy, denigrating expertise and elite pretentions to hard-won knowledge, instead praising the “wisdom of crowds.” The Malcolm Gladwells, Jimmy Waleses, and James Surowieckis of the world are its pied pipers. This movement appeals to the vanity of every self-absorbed narcissist, who would be glad to ridicule intellectuals as “professional secondhand dealers in ideas.”154 But of course it sports a predisposition to disparage intellectuals, since “knowledge and ignorance are relative concepts.”

Furthermore, the audience is guaranteed to shed any residual guilt they might feel in their enjoyment at the distress of the unsuccessful and the destitute through reification of the invisible fourth wall; the lesson reiterated is that it is fine for the audience to bear witness to distress, because the mark entered the arena “voluntarily,” and the verdict was delivered through the “wisdom of crowds,” and in the last instance, there is money to be made and gratification to be experienced at the expense of the loser. Their shame in abject failure becomes a fungible commodity, albeit one of the least rare commodities on the planet. Defeat is not stoic nobility planted on this stage; it is instead the human compost of conspicuous destitution, the fertilizer of economic growth.

• Economists have proven repeatedly that they cannot predict the turning points in the economy. • No specific economic forecasters consistently lead the pack in accuracy. • No economic forecaster has consistently higher forecasting skills predicting any particular economic statistic. • Consensus forecasts do not improve accuracy (although the press loves them. So much for the wisdom of crowds) . • Finally, there’s no evidence that economic forecasting has improved in recent decades18 Again, if this track record was widely known already to have been so very poor, then missing the onset of the crisis should not have caused such consternation on its own. Or conversely, the profession could set about writing down little models that could “retrospectively” have predicted the crisis, doing whatever worked in the past.


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Rebel Ideas: The Power of Diverse Thinking by Matthew Syed

adjacent possible, agricultural Revolution, Alfred Russel Wallace, algorithmic bias, behavioural economics, Bletchley Park, Boeing 747, call centre, Cass Sunstein, classic study, cognitive load, computer age, crowdsourcing, cuban missile crisis, deep learning, delayed gratification, drone strike, Elon Musk, Erik Brynjolfsson, Fairchild Semiconductor, fake news, Ferguson, Missouri, Filter Bubble, Firefox, invention of writing, James Dyson, Jeff Bezos, knowledge economy, lateral thinking, market bubble, mass immigration, microbiome, Mitch Kapor, persistent metabolic adaptation, Peter Thiel, post-truth, Richard Thaler, Ronald Reagan, Second Machine Age, self-driving car, seminal paper, Silicon Valley, social intelligence, Steve Jobs, Steve Wozniak, Stuart Kauffman, tech worker, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, traveling salesman, vertical integration

No model can account for all this complexity. No economist is omniscient. But this implies that if we bring different models together, we create a more complete picture. No economist has the whole truth, but a group of diverse economists gets closer to the truth. Often, much closer. With prediction tasks, this is known as ‘the wisdom of crowds’. There are now dozens of examples of this aspect of diversity science. When, for example, the researcher Scott Page asked his students to estimate the length in miles of the London Underground by writing their guesses on slips of paper, the collective prediction was 249 miles. The true value is 250 miles.

We are preoccupied with helping individuals to become smarter, more perceptive, more able to guard against biases. We noted that the fine work of the likes of Gary Klein and Daniel Kahneman are written from this standpoint. And yet while this perspective is important, we should never allow it to obscure the holistic perspective. The organising concepts in this book are holistic. The collective brain. The wisdom of crowds. Psychological safety. Recombinant innovation. Homophily. Network theory. The dangers of fine-grained assorting. The content of these concepts emerges not from the parts, but the whole. This is crucial in an era where our most pressing problems are too complex for individuals to solve on their own; an era where collective intelligence is moving front and centre.


pages: 246 words: 74,404

Do Nothing: How to Break Away From Overworking, Overdoing, and Underliving by Celeste Headlee

8-hour work day, agricultural Revolution, airport security, Atul Gawande, Bertrand Russell: In Praise of Idleness, correlation does not imply causation, deliberate practice, Downton Abbey, Dunbar number, Elon Musk, estate planning, financial independence, Ford paid five dollars a day, gamification, hedonic treadmill, helicopter parent, Henri Poincaré, hive mind, income inequality, James Watt: steam engine, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, knowledge worker, Lyft, new economy, Parkinson's law, performance metric, Ronald Reagan, Silicon Valley, Snapchat, Steve Jobs, tech billionaire, tech worker, TED Talk, The Theory of the Leisure Class by Thorstein Veblen, The Wisdom of Crowds, theory of mind, Thorstein Veblen, Torches of Freedom, trickle-down economics, uber lyft, women in the workforce, work culture

Again and again, we’ve seen that better decisions are made by polling all employees of an organization than by relying on the judgment of a CEO or one executive team. “However well-informed and sophisticated an expert is, his advice and predictions should be pooled with those of others to get the most out of him,” James Surowiecki says in his book The Wisdom of Crowds. “The more power you give a single individual in the face of complexity and uncertainty, the more likely it is that bad decisions will get made.” Most businesses are not set up to gather the opinions of all employees, though, so how might this look in practice? Let’s say you’re deciding on a venue for an annual conference.

few people wave: Nicholas Epley, Mindwise (New York: Knopf, 2014), 70. “The strength of the pack is the wolf”: Rudyard Kipling, “The Law for the Wolves,” in A Victorian Anthology, 1837–1895, ed. Edmund Clarence Stedman (Boston: Houghton Mifflin, 1895). “However well-informed and sophisticated”: James Surowiecki, The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies, and Nations (New York: Anchor Books, 2004), 220. “Charity is really self-interest masquerading”: Anthony de Mello, Awareness (New York: Image Books, 1992). families who donated their deceased loved one’s organs: Helen Levine Batten and Jeffrey M.


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The Future of the Professions: How Technology Will Transform the Work of Human Experts by Richard Susskind, Daniel Susskind

23andMe, 3D printing, Abraham Maslow, additive manufacturing, AI winter, Albert Einstein, Amazon Mechanical Turk, Amazon Robotics, Amazon Web Services, Andrew Keen, Atul Gawande, Automated Insights, autonomous vehicles, Big bang: deregulation of the City of London, big data - Walmart - Pop Tarts, Bill Joy: nanobots, Blue Ocean Strategy, business process, business process outsourcing, Cass Sunstein, Checklist Manifesto, Clapham omnibus, Clayton Christensen, clean water, cloud computing, commoditize, computer age, Computer Numeric Control, computer vision, Computing Machinery and Intelligence, conceptual framework, corporate governance, creative destruction, crowdsourcing, Daniel Kahneman / Amos Tversky, data science, death of newspapers, disintermediation, Douglas Hofstadter, driverless car, en.wikipedia.org, Erik Brynjolfsson, Evgeny Morozov, Filter Bubble, full employment, future of work, Garrett Hardin, Google Glasses, Google X / Alphabet X, Hacker Ethic, industrial robot, informal economy, information retrieval, interchangeable parts, Internet of things, Isaac Newton, James Hargreaves, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Khan Academy, knowledge economy, Large Hadron Collider, lifelogging, lump of labour, machine translation, Marshall McLuhan, Metcalfe’s law, Narrative Science, natural language processing, Network effects, Nick Bostrom, optical character recognition, Paul Samuelson, personalized medicine, planned obsolescence, pre–internet, Ray Kurzweil, Richard Feynman, Second Machine Age, self-driving car, semantic web, Shoshana Zuboff, Skype, social web, speech recognition, spinning jenny, strong AI, supply-chain management, Susan Wojcicki, tacit knowledge, TED Talk, telepresence, The Future of Employment, the market place, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tragedy of the Commons, transaction costs, Turing test, Two Sigma, warehouse robotics, Watson beat the top human players on Jeopardy!, WikiLeaks, world market for maybe five computers, Yochai Benkler, young professional

In Chapter 2 we observed cases where experts and lay people collaborate with each other, with the former, for example, reviewing, editing, or supplementing the user-generated content. A third type of online collaboration is crowdsourcing. Here large numbers of people—experts or non-specialists—are invited to contribute to a well-defined project or problem that is so large that it requires many hands, or is so difficult that it might benefit from the ‘wisdom of crowds’,24 or so obscure that an answer is most likely to be found if the net of inquiry is spread widely enough. WikiHouse and Arcbazar in architecture, and Open Ideo and WikiStrat in consulting, have run crowdsourcing projects in this manner. Realization of latent demand One of the attractions of the new approaches to professional work and, in particular, of various online services, is that practical expertise is steadily becoming more affordable and accessible.

Glasgow Herald, 18 Nov.1985, p. 15. 17 <http://www.ey.com> (accessed 23 March 2015). 18 Atul Gawande, The Checklist Manifesto (2010), 34. 19 Gawande, The Checklist Manifesto, 36. 20 See Yochai Benkler, The Wealth of Networks—How Social Production Transforms Markets and Freedom (2006). 21 <http://www.tripadvisor.co.uk>. 22 See Eric Topol, The Patient Will See You Now (2015), on driverless cars and doctorless patients. 23 Penelope Eckert, ‘Communities of Practice’, in The Encyclopedia of Language and Linguistics, ed. Keith Brown (2006). 24 James Surowiecki, The Wisdom of Crowds (2004). 25 See e.g. David Maister, Managing the Professional Service Firm (1993). 26 See e.g. the Sarbanes–Oxley Act of 2002 in the USA (n. 15 above). 27 Directive 2014/56/EU of the European Parliament and of the Council of 16 April 2014 amending Directive 2006/43/EC on statutory audits of annual accounts and consolidated accounts. 28 With original emphasis, from Herbert L.

Summers, Larry, ‘What You (Really) Need to Know’, New York Times, 20 Jan. 2012 <http://www.nytimes.com> (accessed 27 March 2015). Summers, Larry, ‘Economic Possibilities for Our Children’, NBER Reporter, no. 4, 2014 <http://www.nber.org/reporter/2013number4/2013no4.pdf> (accessed 29 March 2015). Sunstein, Cass, Infotopia (New York: Oxford University Press, 2006). Surowiecki, James, The Wisdom of Crowds (London: Abacus, 2004). Surowiekcki, James, ‘A Billion Prices Now’, New Yorker, 30 May 2011. Susskind, Richard, Expert Systems in Law (Oxford: Clarendon Press, 1987; paperback edn., 1989). Susskind, Richard, ‘Why Lawyers Should Consider Consultancy’, Financial Times, 13 Oct. 1992. Susskind, Richard, The Future of Law (Oxford: Oxford University Press, 1996; paperback edn., 1998).


Adam Smith: Father of Economics by Jesse Norman

active measures, Alan Greenspan, Andrei Shleifer, balance sheet recession, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, Berlin Wall, Black Swan, Branko Milanovic, Bretton Woods, British Empire, Broken windows theory, business cycle, business process, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, centre right, cognitive dissonance, collateralized debt obligation, colonial exploitation, Corn Laws, Cornelius Vanderbilt, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, David Ricardo: comparative advantage, deindustrialization, electricity market, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, Fellow of the Royal Society, financial engineering, financial intermediation, frictionless, frictionless market, future of work, George Akerlof, Glass-Steagall Act, Hyman Minsky, income inequality, incomplete markets, information asymmetry, intangible asset, invention of the telescope, invisible hand, Isaac Newton, Jean Tirole, John Nash: game theory, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, lateral thinking, loss aversion, low interest rates, market bubble, market fundamentalism, Martin Wolf, means of production, mirror neurons, money market fund, Mont Pelerin Society, moral hazard, moral panic, Naomi Klein, negative equity, Network effects, new economy, non-tariff barriers, Northern Rock, Pareto efficiency, Paul Samuelson, Peter Thiel, Philip Mirowski, price mechanism, principal–agent problem, profit maximization, public intellectual, purchasing power parity, random walk, rent-seeking, Richard Thaler, Robert Shiller, Robert Solow, Ronald Coase, scientific worldview, seigniorage, Socratic dialogue, South Sea Bubble, special economic zone, speech recognition, Steven Pinker, The Chicago School, The Myth of the Rational Market, The Nature of the Firm, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Malthus, Thorstein Veblen, time value of money, transaction costs, transfer pricing, Veblen good, Vilfredo Pareto, Washington Consensus, working poor, zero-sum game

On the whole, these markets work in the way canonically attributed to Smith on the model of the so-called ‘invisible hand’, with supply and demand tending towards competitive equilibrium, and they work extremely well. Another way of thinking of these markets is that they exhibit what has become known as the ‘wisdom of crowds’, and they do so because they satisfy four conditions: those involved are diverse in their access to information and in their opinions; they are independent, each person exercising his or her own view and not deferring to others; they are decentralized, so that they can specialize or draw on local knowledge; and there is a means—a market mechanism—to aggregate or gather their private judgements or choices together into a collective decision.

., A History of the Scottish People 1560–1830, William Collins 1999 Steuart, Sir James, An Inquiry into the Principles of Political Economy, ed. Andrew Skinner, Oliver & Boyd 1966 Stiglitz, Joseph E., Globalisation and its Discontents Revisited, Penguin Books 2017 Stiglitz, Joseph E., The Price of Inequality, Penguin Books 2012 Surowiecki, James, The Wisdom of Crowds, Doubleday Books 2004 Szechi, Daniel, The Jacobites: Britain and Europe 1688–1788, Manchester University Press 1994 Taleb, Nassim Nicholas, The Black Swan, Random House 2007 Tavris, Carol and Elliot Aronson, Mistakes Were Made (But Not by Me), Mariner Books 2015 Thompson, Harold, A Scottish Man of Feeling: Some Account of Henry Mackenzie… and of the Golden Age of Burns and Scott, Oxford University Press 1931 Tirole, Jean, Economics for the Common Good, Princeton University Press 2017 Tytler, Alexander Fraser, Lord Woodhouselee, Memoirs of the Life and Writings of the Honourable Henry Home of Kames, T.

In other words, market failure is endemic, and can never be the sole justification for policy interventions; and there can be no escape through economic theory from the need for political economy. I am very grateful to Tim Besley for this point; see especially his ‘The New Political Economy’, Economic Journal, 117.524, 2007. See also Roman Frydman and Michael D. Goldberg, Imperfect Knowledge Economics, Princeton University Press 2007 Wisdom of crowds: cf. James Surowiecki, The Wisdom of Crowds, Doubleday Books 2004 Veblen goods: see Thorstein Veblen, The Theory of the Leisure Class: An Economic Study in the Evolution of Institutions, Macmillan 1899. In his essay on the imitative arts (in EPS) Smith memorably analyses the phenomenon of topiary in Veblenian terms: ‘It was some years ago the fashion to ornament a garden with yew and holly trees, clipped into the artificial shapes of pyramids, and columns, and vases, and obelisks.


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Model Thinker: What You Need to Know to Make Data Work for You by Scott E. Page

Airbnb, Albert Einstein, Alfred Russel Wallace, algorithmic trading, Alvin Roth, assortative mating, behavioural economics, Bernie Madoff, bitcoin, Black Swan, blockchain, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Checklist Manifesto, computer age, corporate governance, correlation does not imply causation, cuban missile crisis, data science, deep learning, deliberate practice, discrete time, distributed ledger, Easter island, en.wikipedia.org, Estimating the Reproducibility of Psychological Science, Everything should be made as simple as possible, experimental economics, first-price auction, Flash crash, Ford Model T, Geoffrey West, Santa Fe Institute, germ theory of disease, Gini coefficient, Higgs boson, High speed trading, impulse control, income inequality, Isaac Newton, John von Neumann, Kenneth Rogoff, knowledge economy, knowledge worker, Long Term Capital Management, loss aversion, low skilled workers, Mark Zuckerberg, market design, meta-analysis, money market fund, multi-armed bandit, Nash equilibrium, natural language processing, Network effects, opioid epidemic / opioid crisis, p-value, Pareto efficiency, pattern recognition, Paul Erdős, Paul Samuelson, phenotype, Phillips curve, power law, pre–internet, prisoner's dilemma, race to the bottom, random walk, randomized controlled trial, Richard Feynman, Richard Thaler, Robert Solow, school choice, scientific management, sealed-bid auction, second-price auction, selection bias, six sigma, social graph, spectrum auction, statistical model, Stephen Hawking, Supply of New York City Cabdrivers, systems thinking, tacit knowledge, The Bell Curve by Richard Herrnstein and Charles Murray, The Great Moderation, the long tail, The Rise and Fall of American Growth, the rule of 72, the scientific method, The Spirit Level, the strength of weak ties, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, Tragedy of the Commons, urban sprawl, value at risk, web application, winner-take-all economy, zero-sum game

The theorem does not imply that any collection of diverse models will be accurate. If all of the models share a common bias, their average will also contain that bias. The theorem does imply that any collection of diverse models (or people) will be more accurate than its average member, a phenomenon referred to as the wisdom of crowds. That mathematical fact explains the success of ensemble methods in computer science that average multiple classifications as well as evidence that individuals who think using multiple models and frameworks predict with higher accuracy than people who use single models. Any single way of looking at the world leaves out details and makes us prone to blind spots.

In point of fact, the correlations in performance could result from similarities in investment portfolios as well as one bank holding assets in another. 15 See Geithner 2014. 16 See Weisberg 2012 for a description of the San Francisco Bay model and its usefulness in policy. 17 See Stone et al. 2014 for a full account. 18 I thank Josh Epstein for the first example. 19 See Dunne 1999 and Raby 2001. Chapter 3: The Science of Many Models 1 Levins 1966. 2 See Page 2007, 2017 for more detailed descriptions and derivation. 3 See Suroweicki 2006 on the wisdom of crowds; Tetlock 2005 on how foxes outperform hedgehogs; Kalyvas 1999 on the failure of political science to predict the fall of the Soviet Union; and Patel et al. 2011 on ensemble methods in computer science. 4 Hong and Page 2009 show that independent models require a unique set of categorizations.

Storchmann, Karl. 2011. “Wine Economics: Emergence, Developments, Topics.” Agrekon 50, no. 3: 1–28. Suki, Bela, and Urs Frey. 2017. “A Time Varying Biased Random Walk Model of Growth: Application to Height from Birth to Childhood.” Journal of Critical Care 38: 362–370. Suroweicki, James. 2006. The Wisdom of Crowds. New York: Anchor Press. Syverson, Chad. 2007. “Prices, Spatial Competition, and Heterogeneous Producers: An Empirical Test.” Journal of Industrial Economics 55, no. 2: 197–222. Taleb, Nassim. 2001. Fooled by Randomness. New York: Random House. Taleb, Nassim. 2007. The Black Swan: The Impact of the Highly Improbable.


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Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry by David Robertson, Bill Breen

barriers to entry, Blue Ocean Strategy, business logic, business process, Clayton Christensen, creative destruction, crowdsourcing, Day of the Dead, Dean Kamen, digital divide, disruptive innovation, financial independence, game design, global supply chain, Jeff Bezos, Kickstarter, Mark Zuckerberg, Minecraft, Rubik’s Cube, Silicon Valley, Steve Jobs, subscription business, systems thinking, The Wisdom of Crowds, Wall-E, work culture

“Kjeld stood up and told us, ‘You people are the future of the company,’ ” remembered Tveskov. “And we totally believed him.” Foster open innovation—heed the wisdom of the crowd. During the first years of the past decade, the heaving growth of massive online communities inspired books such as Open Innovation, Wikinomics, and The Wisdom of Crowds, which showed how creative companies were harnessing the collective genius of virtual communities to spur innovation and growth. LEGO, a conservative company whose numerous battles over patent infringements had made it hyperprotective of its intellectual property, certainly did not rush into the crowdsourcing craze.

So began the LEGO Group’s disciplined bid to amplify one of the past decade’s most talked-about business innovations—tapping the “wisdom of the crowd” to create breakthrough products. Keep in mind that LEGO launched its experiment with crowdsourcing in 2004, a full year before James Surowiecki came out with his groundbreaking book The Wisdom of Crowds, in which he posited that because groups of people are “often smarter than the smartest people in them,” a crowd’s “collective intelligence” will produce better outcomes than a small group of experts. Since the publication of that and other books on customer cocreation, initiatives ranging from LINUX to Wikipedia to more than 240,000 open-source software development projects (according to SourceForge.net) have amply demonstrated that crowdsourcing opens an organization up to a broad swath of insights and ideas that it could never muster by itself.


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Here Comes Everybody: The Power of Organizing Without Organizations by Clay Shirky

Andrew Keen, Andy Carvin, Berlin Wall, bike sharing, bioinformatics, Brewster Kahle, c2.com, Charles Lindbergh, commons-based peer production, crowdsourcing, digital rights, en.wikipedia.org, Free Software Foundation, Garrett Hardin, hiring and firing, hive mind, Howard Rheingold, Internet Archive, invention of agriculture, invention of movable type, invention of the printing press, invention of the telegraph, jimmy wales, John Perry Barlow, Joi Ito, Kuiper Belt, liberation theology, Mahatma Gandhi, means of production, Merlin Mann, Metcalfe’s law, Nash equilibrium, Network effects, Nicholas Carr, Picturephone, place-making, Pluto: dwarf planet, power law, prediction markets, price mechanism, prisoner's dilemma, profit motive, Richard Stallman, Robert Metcalfe, Ronald Coase, Silicon Valley, slashdot, social software, Stewart Brand, supply-chain management, the Cathedral and the Bazaar, the long tail, The Nature of the Firm, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tragedy of the Commons, transaction costs, ultimatum game, Vilfredo Pareto, Wayback Machine, Yochai Benkler, Yogi Berra

This is one of the things social tools don’t change about group life—small groups are more effective at creating and sustaining both agreement and shared awareness. The core characteristics of large groups are the inverse. People have to be less tightly connected, on average, to one another. As a result, such groups are better able to produce what James Surowiecki has called “the wisdom of crowds.” In his book of that name he identified the ways distributed groups whose members aren’t connected can often generate better answers, by pooling their knowledge or intuition without having to come to an agreement. We have many ways of achieving this kind of aggregation, from market pricing mechanisms to voting to the prediction markets Surowiecki champions, but these methods all have two common characteristics: they work better in large groups, and they don’t require direct communication as the norm among members.

Yang Huanming’s lament about the obstacles to their work can be found in translation at the YaleGlobal journal, in “Chinese Scientists Say SARS Efforts Stymied by Organizational Obstacles” (yaleglobal.yale.edu/display.article?id=1745. ). Martin Enserink has a broader review of the Chinese performance in “SARS in China: China’s Missed Chance” Science 301 (5631), July 18, 2003, and at www.sciencemag.org/cgi/content/full/301/5631/294). CHAPTER 11: PROMISE, TOOL, BARGAIN Page 267: The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations, James Surowiecki (Doubleday, 2004) Page 276: equality matching The idea of equality matching (and the other listed forms of social participation) come from Alan Page Fiske’s Structures of Social Life: The Four Elementary Forms of Human Relations: Communal Sharing, Authority Ranking, Equality Matching, Market Pricing, Free Press (1991).


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The Rise and Fall of Nations: Forces of Change in the Post-Crisis World by Ruchir Sharma

"World Economic Forum" Davos, Asian financial crisis, backtesting, bank run, banking crisis, Berlin Wall, Bernie Sanders, BRICs, business climate, business cycle, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, centre right, colonial rule, commodity super cycle, corporate governance, creative destruction, crony capitalism, currency peg, dark matter, debt deflation, deglobalization, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, Doha Development Round, Donald Trump, driverless car, Edward Glaeser, Elon Musk, eurozone crisis, failed state, Fall of the Berlin Wall, falling living standards, financial engineering, Francis Fukuyama: the end of history, Freestyle chess, Gini coefficient, global macro, Goodhart's law, guns versus butter model, hiring and firing, hype cycle, income inequality, indoor plumbing, industrial robot, inflation targeting, Internet of things, Japanese asset price bubble, Jeff Bezos, job automation, John Markoff, Joseph Schumpeter, junk bonds, Kenneth Rogoff, Kickstarter, knowledge economy, labor-force participation, Larry Ellison, lateral thinking, liberal capitalism, low interest rates, Malacca Straits, Mark Zuckerberg, market bubble, Mary Meeker, mass immigration, megacity, megaproject, Mexican peso crisis / tequila crisis, middle-income trap, military-industrial complex, mittelstand, moral hazard, New Economic Geography, North Sea oil, oil rush, oil shale / tar sands, oil shock, open immigration, pattern recognition, Paul Samuelson, Peter Thiel, pets.com, plutocrats, Ponzi scheme, price stability, Productivity paradox, purchasing power parity, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, Ronald Coase, Ronald Reagan, savings glut, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Simon Kuznets, smart cities, Snapchat, South China Sea, sovereign wealth fund, special economic zone, spectrum auction, Steve Jobs, tacit knowledge, tech billionaire, The Future of Employment, The Wisdom of Crowds, Thomas Malthus, total factor productivity, trade liberalization, trade route, tulip mania, Tyler Cowen: Great Stagnation, unorthodox policies, Washington Consensus, WikiLeaks, women in the workforce, work culture , working-age population

This is a classic case of Goodhart’s Law, which says that once a measure becomes a target, it ceases to be useful, partly because so many people have an incentive to doctor numbers to meet it.6 One useful and timely data source is the prices in global financial markets, which in normal times will accurately capture the world’s best collective guess about the likely prospects of an economy. What author James Surowiecki has called “the wisdom of crowds” has substance, and the market embodies it, second by second, subject to emotional contagions but not wild revisions.7 A sharp decline in the price of copper has almost always been an ominous sign for the global economy, earning the base metal the moniker “Dr. Copper” in financial circles.

EPWP1401, February 2014. 4 Ghada Fayad and Roberto Perrelli, “Growth Surprises and Synchronized Slowdowns in Emerging Markets: An Empirical Investigation,” International Monetary Fund, 2014. 5 Lant Pritchett and Lawrence Summers, “Asiaphoria Meets Regression to the Mean,” National Bureau of Economic Research, Working Paper no. 20573, October 2014. 6 “Goodhart’s Law,” BusinessDictionary.com. 7 James Surowiecki, The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies, and Nations (New York: Doubleday, 2004). 8 Ned Davis, Ned’s Insights, November 14, 2014. 9 “Picking Apart the Productivity Paradox,” Goldman Sachs Research, October 5, 2015. Chapter 1: People Matter 1 Rick Gladstone, “India Will Be Most Populous Country Sooner Than Thought.”

“The Ever-Emerging Markets: Why Economic Forecasts Fail.” Foreign Affairs 93, no. 1 (2014). ——. “China’s Stock Plunge Is Scarier Than Greece.” Wall Street Journal, July 7, 2015. Studwell, Joe. How Asia Works: Success and Failure in the World’s Most Dynamic Region. New York: Grove, 2013. Surowiecki, James. The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies, and Nations. New York: Doubleday, 2004. Tilton, Andrew. “Still Wading Through ‘Great Stagnations.’ ” Goldman Sachs Global Investment Research, September 17, 2014. ——. “Growth Recovery and Trade Stagnation Evidence from New Data.”


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Superforecasting: The Art and Science of Prediction by Philip Tetlock, Dan Gardner

Affordable Care Act / Obamacare, Any sufficiently advanced technology is indistinguishable from magic, availability heuristic, behavioural economics, Black Swan, butterfly effect, buy and hold, cloud computing, cognitive load, cuban missile crisis, Daniel Kahneman / Amos Tversky, data science, desegregation, drone strike, Edward Lorenz: Chaos theory, forward guidance, Freestyle chess, fundamental attribution error, germ theory of disease, hindsight bias, How many piano tuners are there in Chicago?, index fund, Jane Jacobs, Jeff Bezos, Kenneth Arrow, Laplace demon, longitudinal study, Mikhail Gorbachev, Mohammed Bouazizi, Nash equilibrium, Nate Silver, Nelson Mandela, obamacare, operational security, pattern recognition, performance metric, Pierre-Simon Laplace, place-making, placebo effect, precautionary principle, prediction markets, quantitative easing, random walk, randomized controlled trial, Richard Feynman, Richard Thaler, Robert Shiller, Ronald Reagan, Saturday Night Live, scientific worldview, Silicon Valley, Skype, statistical model, stem cell, Steve Ballmer, Steve Jobs, Steven Pinker, tacit knowledge, tail risk, the scientific method, The Signal and the Noise by Nate Silver, The Wisdom of Crowds, Thomas Bayes, Watson beat the top human players on Jeopardy!

Dragonfly Eye In 1906 the legendary British scientist Sir Francis Galton went to a country fair and watched as hundreds of people individually guessed the weight that a live ox would be after it was “slaughtered and dressed.” Their average guess—their collective judgment—was 1,197 pounds, one pound short of the correct answer, 1,198 pounds. It was the earliest demonstration of a phenomenon popularized by—and now named for—James Surowiecki’s bestseller The Wisdom of Crowds. Aggregating the judgment of many consistently beats the accuracy of the average member of the group, and is often as startlingly accurate as Galton’s weight-guessers. The collective judgment isn’t always more accurate than any individual guess, however. In fact, in any group there are likely to be individuals who beat the group.

Robert Shiller, interview with the author, August 13, 2013. 7. Supernewsjunkies? 1. David Budescu and Eva Chen have invented a contribution-weighted method of scoring forecasters that gives special weight to those who see things before others do; see D. V. Budescu and E. Chen, “Identifying Expertise to Extract the Wisdom of Crowds,” Management Science 61, no. 2 (2015): 267–80. 2. Doug Lorch, in discussion with the author, September 30, 2014. The Arctic sea ice question, like the Arafat-polonium question (and others), pushed the ideological hot buttons of many forecasters. They saw bigger questions behind the smaller ones.


Future Files: A Brief History of the Next 50 Years by Richard Watson

Abraham Maslow, Albert Einstein, bank run, banking crisis, battle of ideas, Black Swan, call centre, carbon credits, carbon footprint, carbon tax, cashless society, citizen journalism, commoditize, computer age, computer vision, congestion charging, corporate governance, corporate social responsibility, deglobalization, digital Maoism, digital nomad, disintermediation, driverless car, epigenetics, failed state, financial innovation, Firefox, food miles, Ford Model T, future of work, Future Shock, global pandemic, global supply chain, global village, hive mind, hobby farmer, industrial robot, invention of the telegraph, Jaron Lanier, Jeff Bezos, knowledge economy, lateral thinking, linked data, low cost airline, low skilled workers, M-Pesa, mass immigration, Northern Rock, Paradox of Choice, peak oil, pensions crisis, precautionary principle, precision agriculture, prediction markets, Ralph Nader, Ray Kurzweil, rent control, RFID, Richard Florida, self-driving car, speech recognition, synthetic biology, telepresence, the scientific method, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Turing test, Victor Gruen, Virgin Galactic, white flight, women in the workforce, work culture , Zipcar

The bad news, perhaps, is that technologically speaking, privacy is dead or dying. The good news is that all this connectivity is increasing transparency and hence our behavior may actually become more honest. We may even get smarter at making decisions, because our connectivity will allow instant polling and the wisdom of crowds is nearly always greater than the intelligence of any single member. We will thus see a subtle shift from “me” to “we”. GRIN technologies Machines will be a dominant feature of the future. Computers will eventually become more intelligent than people, at which point humanity will be faced with something of a dilemma.

But while Kurzweil sees computers doubling in speed and power and programmers working feverishly to this end, Kapor believes that human beings differ so totally from machines that the test will never be passed, not least because we are housed in bodies that feel pleasure and pain and accumulate experience and knowledge, much of which is tacit rather than expressed. Other experts such as neurophysiologist Bill Calvin suggest that the human brain is so “buggy” that computers will never be able to emulate it. Ultimately, though, this might not be the point; as some have suggested — such as James Surowiecki in his book The Wisdom of Crowds — the internet is already fostering an unanticipated form of AI, a highly efficient marketplace for ideas and information known as collective intelligence or the “hive mind”. In other words, if we connected up all the computers on the planet and asked the resultant network or grid a question like “Is there a God?”


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Currency Wars: The Making of the Next Gobal Crisis by James Rickards

"World Economic Forum" Davos, Alan Greenspan, Asian financial crisis, bank run, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Big bang: deregulation of the City of London, Black Swan, borderless world, Bretton Woods, BRICs, British Empire, business climate, buy and hold, capital controls, Carmen Reinhart, Cass Sunstein, collateralized debt obligation, complexity theory, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, currency manipulation / currency intervention, currency peg, currency risk, Daniel Kahneman / Amos Tversky, deal flow, Deng Xiaoping, diversification, diversified portfolio, Dr. Strangelove, Fall of the Berlin Wall, family office, financial innovation, floating exchange rates, full employment, game design, German hyperinflation, Gini coefficient, global rebalancing, global reserve currency, Great Leap Forward, guns versus butter model, high net worth, income inequality, interest rate derivative, it's over 9,000, John Meriwether, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, Long Term Capital Management, low interest rates, mandelbrot fractal, margin call, market bubble, Mexican peso crisis / tequila crisis, Money creation, money market fund, money: store of value / unit of account / medium of exchange, Myron Scholes, Network effects, New Journalism, Nixon shock, Nixon triggered the end of the Bretton Woods system, offshore financial centre, oil shock, one-China policy, open economy, paradox of thrift, Paul Samuelson, power law, price mechanism, price stability, private sector deleveraging, proprietary trading, quantitative easing, race to the bottom, RAND corporation, rent-seeking, reserve currency, Ronald Reagan, short squeeze, sovereign wealth fund, special drawing rights, special economic zone, subprime mortgage crisis, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, time value of money, too big to fail, value at risk, vertical integration, War on Poverty, Washington Consensus, zero-sum game

If the market concurred with the Fed’s judgment on deflation, then there should be no run on gold—in fact, the Fed might have to be a buyer of gold to maintain the price. Conversely, if the market questioned the Fed’s judgment, then a rush to redeem paper for gold might result, which would be a powerful signal to the Fed that it needed to return to the original money-gold ratio. Based on what behavioral economists and sociologists have observed about the “wisdom of crowds” as reflected in market prices, this would seem to be a more reliable guide than relying on the narrow judgment of a few lawyers and economists gathered in the Fed’s high-ceilinged boardroom. A variation of this approach would be to allow the Fed to exceed the gold coverage ratio ceiling upon the announcement of a bona fide financial emergency by a joint declaration from the president of the United States and the speaker of the House.

New Haven: Yale University Press, 2009. Steil, Benn, and Robert E. Litan. Financial Statecraft: The Role of Financial Markets in American Policy. New Haven: Yale University Press, 2006. Stewart, Bruce H., and J. M. Thompson. Nonlinear Dynamics and Chaos, 2nd ed. Chichester, UK: Wiley, 2002. Surowiecki, James. The Wisdom of Crowds. New York: Doubleday, 2004. Tainter, Joseph A. The Collapse of Complex Societies. Cambridge: Cambridge University Press, 1988. Taleb, Nassim Nicholas. The Black Swan: The Impact of the Highly Improbable. New York: Random House, 2007. Tarnoff, Ben. Moneymakers: The Wicked Lives and Surprising Adventures of Three Notorious Counterfeiters.


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Thinking About It Only Makes It Worse: And Other Lessons From Modern Life by David Mitchell

bank run, Boris Johnson, British Empire, cakes and ale, cognitive dissonance, collapse of Lehman Brothers, credit crunch, don't be evil, double helix, Downton Abbey, Dr. Strangelove, Etonian, eurozone crisis, Golden age of television, haute cuisine, high-speed rail, Julian Assange, lateral thinking, Northern Rock, Ocado, offshore financial centre, payday loans, plutocrats, profit motive, Russell Brand, sensible shoes, Skype, The Wisdom of Crowds, WikiLeaks

It’s very easy to see where that money comes from and, if you don’t like Stoke City or Lady Gaga, you don’t have to contribute yourself. But, when it comes to financial services executives, I agree with Howe that this lack of understanding exists – but I don’t agree that it’s a problem. I think it’s a good thing. I think it’s the product of the wisdom of crowds. People don’t understand why bank and building society executives are so highly paid simply because there is no adequate explanation. It’s an anomaly which, practically speaking, could only be corrected by the very people who benefit from it. That is a key failing with the current financial system.

When a restaurant owner approaches a website to ask for some negative reviews to be removed, saying they’re biased, the claim is going to be viewed with scepticism – in the unlikely event that the website has any staff to view it at all. Online reviews, either anonymous or with no verifiable name, customarily go up unchallenged. We assume that the wisdom of crowds will ensure that a fair impression is given overall – that the uncensored self-expression of hundreds of millions will tend towards the truth. Half the time it just regresses to the mean. And the rest of the time it goes the other way: overeffusive, hysterical praise. So often you’ll read a review that couldn’t be bettered if the hotelier, restaurateur, musician, bar owner or author had written it themselves.


The Myth of Artificial Intelligence: Why Computers Can't Think the Way We Do by Erik J. Larson

AI winter, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Albert Einstein, Alignment Problem, AlphaGo, Amazon Mechanical Turk, artificial general intelligence, autonomous vehicles, Big Tech, Black Swan, Bletchley Park, Boeing 737 MAX, business intelligence, Charles Babbage, Claude Shannon: information theory, Computing Machinery and Intelligence, conceptual framework, correlation does not imply causation, data science, deep learning, DeepMind, driverless car, Elon Musk, Ernest Rutherford, Filter Bubble, Geoffrey Hinton, Georg Cantor, Higgs boson, hive mind, ImageNet competition, information retrieval, invention of the printing press, invention of the wheel, Isaac Newton, Jaron Lanier, Jeff Hawkins, John von Neumann, Kevin Kelly, Large Hadron Collider, Law of Accelerating Returns, Lewis Mumford, Loebner Prize, machine readable, machine translation, Nate Silver, natural language processing, Nick Bostrom, Norbert Wiener, PageRank, PalmPilot, paperclip maximiser, pattern recognition, Peter Thiel, public intellectual, Ray Kurzweil, retrograde motion, self-driving car, semantic web, Silicon Valley, social intelligence, speech recognition, statistical model, Stephen Hawking, superintelligent machines, tacit knowledge, technological singularity, TED Talk, The Coming Technological Singularity, the long tail, the scientific method, The Signal and the Noise by Nate Silver, The Wisdom of Crowds, theory of mind, Turing machine, Turing test, Vernor Vinge, Watson beat the top human players on Jeopardy!, Yochai Benkler

In retrospect, Lanier’s worry in his 2010 You Are Not a Gadget was prescient, but all too late: “A new generation has come of age with a reduced expectation of what a person can be, and of who each person might become.” 6 Perhaps the hive mind idea itself seems a ­l ittle quaint ­today, if only for the equally depressing reason that major ideas about ­human potential have receded. In 2005 Google was still a marvel, a wonderful example of h­ uman innovation. ­Today, our ubiquitous search engine ­g iant is like the keychain in our pocket. We have ceased to even notice it. Less than a de­cade ­a fter James Surowiecki’s 2005 hit The Wisdom of Crowds, the idea that p­ eople on Twitter or other social networks display collective wisdom—or wisdom at all—­seemed laughable.7 It is telling that my­thol­ogy about AI has not also been ridiculed, and seems ever more on the rise. Chapter 16 • • • A I M Y ­T H O L­O G Y I N VA D E S N EU ROSCI ENCE “Hive mind” remains in the lexicon, even if it i­ sn’t invoked with such seriousness anymore.

Yochai Benkler, The Wealth of Networks: How Social Production Transforms Markets and Freedom (New Haven, CT: Yale University Press, 2007). 4. Ibid., Epigraph. 5. Clay Shirky, ­Here Comes Every­body: The Power of Organ­izing Without Organ­izations (New York: Penguin Books, 2009). 6. Lanier, You Are Not a Gadget, 1. 7. James Surowiecki, The Wisdom of Crowds (New York: Anchor, 2005). Chapter 16: AI My­thol­ogy Invades Neuroscience 1. Sean Hill, “Simulating the Brain,” in Gary Marcus and Jeremy ­ uture of the Brain: Essays by the World’s Leading NeuroFreeman, eds., The F scientists (Prince­ton, NJ: Prince­ton University Press, 2015), 123–124. 298 N OT E S TO PAG E S 2 4 6 –2 63 2.


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Grouped: How Small Groups of Friends Are the Key to Influence on the Social Web by Paul Adams

Airbnb, Cass Sunstein, cognitive dissonance, content marketing, David Brooks, Dunbar number, information retrieval, invention of the telegraph, Jeff Hawkins, mirror neurons, planetary scale, race to the bottom, Richard Thaler, sentiment analysis, social web, statistical model, the strength of weak ties, The Wisdom of Crowds, web application, white flight

See the Wikipedia article on Social Norms for more information. 12. See the 2010 poster presentation “N170 responses to faces predict implicit ingroup favoritism” by Kyle Ratner and David Amodio. 13. See the work of Herbert Simon and the Wikipedia article on Bounded Rationality. 14. See James Surowiecki’s book The Wisdom of Crowds (Anchor, 2005). 15. See the 2010 research paper “Optimally interacting minds” by Bahrami and others. 16. Data from the NCCN private community of cancer patients as described in Groundswell, a book by Charlene Li and Josh Bernoff (Harvard Business Press, 2008). 17. See Philip Tetlock’s book Expert Political Judgment: How Good Is It?


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#Republic: Divided Democracy in the Age of Social Media by Cass R. Sunstein

A Declaration of the Independence of Cyberspace, affirmative action, Affordable Care Act / Obamacare, Alvin Toffler, behavioural economics, Bernie Sanders, Black Lives Matter, Cass Sunstein, choice architecture, digital divide, Donald Trump, drone strike, Erik Brynjolfsson, fake news, Filter Bubble, friendly fire, global village, illegal immigration, immigration reform, income inequality, Jane Jacobs, John Perry Barlow, loss aversion, Mark Zuckerberg, obamacare, Oklahoma City bombing, prediction markets, road to serfdom, Ronald Reagan, Silicon Valley, Skype, Snapchat, stem cell, The Chicago School, The Death and Life of Great American Cities, the long tail, The Wisdom of Crowds, Twitter Arab Spring, WikiLeaks, Yochai Benkler

Notably, people in the study received monetary payments for getting the right answer, so their mistakes were really mistakes—not an effort to curry favor with others. The authors conclude that for decision makers, the advice given by a group “may be thoroughly misleading, because closely related, seemingly independent advice may pretend certainty despite substantial deviations from the correct solution.”22 There’s a lesson there for the wisdom of crowds in online settings. Because people are interacting with one another, they might not be so wise. SEGREGATION, MIGRATION, AND INTEGRATION The Daily Me is not a lived reality, at least for most of us. Facebook, Twitter, Instagram, and Snapchat accounts can certainly spread diverse points of view, and many people use them in exactly that way.

.; Granovetter, “Threshold Models,” 1422–24. 18.Lev Muchnik, Sinan Aral, and Sean J. Taylor, “Social Influence Bias: A Randomized Experiment,” Science 341, no. 6146 (2013): 647–51. 19.Ibid., 650. 20.See Jan Lorenz, Heiko Rauhut, Frank Schweitzer, and Dirk Helbing, “How Social Influences Can Undermine the Wisdom of Crowd Effect,” Proceedings of the National Academy of Sciences 108, no. 22 (2011): 9020–25. 21.See ibid. Note, however, that even with diminished diversity, the crowd was still somewhat more accurate than a typical individual. This is a “soft” result, as the conclusion depends on the statistics used to analyze the data, but overall, groups were still wiser than individuals, though not always at conventional levels of statistical significance. 22.Ibid., 9024. 23.See R.


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Rage Inside the Machine: The Prejudice of Algorithms, and How to Stop the Internet Making Bigots of Us All by Robert Elliott Smith

"World Economic Forum" Davos, Ada Lovelace, adjacent possible, affirmative action, AI winter, Alfred Russel Wallace, algorithmic bias, algorithmic management, AlphaGo, Amazon Mechanical Turk, animal electricity, autonomous vehicles, behavioural economics, Black Swan, Brexit referendum, British Empire, Cambridge Analytica, cellular automata, Charles Babbage, citizen journalism, Claude Shannon: information theory, combinatorial explosion, Computing Machinery and Intelligence, corporate personhood, correlation coefficient, crowdsourcing, Daniel Kahneman / Amos Tversky, data science, deep learning, DeepMind, desegregation, discovery of DNA, disinformation, Douglas Hofstadter, Elon Musk, fake news, Fellow of the Royal Society, feminist movement, Filter Bubble, Flash crash, Geoffrey Hinton, Gerolamo Cardano, gig economy, Gödel, Escher, Bach, invention of the wheel, invisible hand, Jacquard loom, Jacques de Vaucanson, John Harrison: Longitude, John von Neumann, Kenneth Arrow, Linda problem, low skilled workers, Mark Zuckerberg, mass immigration, meta-analysis, mutually assured destruction, natural language processing, new economy, Northpointe / Correctional Offender Management Profiling for Alternative Sanctions, On the Economy of Machinery and Manufactures, p-value, pattern recognition, Paul Samuelson, performance metric, Pierre-Simon Laplace, post-truth, precariat, profit maximization, profit motive, Silicon Valley, social intelligence, statistical model, Stephen Hawking, stochastic process, Stuart Kauffman, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, The Future of Employment, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Bayes, Thomas Malthus, traveling salesman, Turing machine, Turing test, twin studies, Vilfredo Pareto, Von Neumann architecture, warehouse robotics, women in the workforce, Yochai Benkler

Gallup also reports drops in confidence versus historical averages for institutions as varied as banking, criminal justice, medicine, organized labour, big business, police, print media, broadcast media, public schools and organized religion.3 Meanwhile, faith in the opinion of the masses is soaring. What was once derided as ‘lowest common denominator’ is now hailed ‘the wisdom of crowds’. This ‘wisdom’ isn’t only being exploited by populist politicians; it is the life blood of today’s AI. The fact that expertise proved hard to fathom for expert systems is exactly what led to the AI winter. Since then there have been no significant technical breakthroughs on modelling how smart people reason.

As Mickey said, ‘A bookie sets the odds to get what he needs … And trust me, the bettors have no idea about the probabilities.’ 4 Scientific Pride and Prejudice 50,000,000 Elvis fans can’t be wrong. Album cover, spotted at Floyd’s Live Catfish, 1984 Given the cold computational underpinning of AI, there is a widespread assumption that algorithmic decision-making is objective and without bias. With big data analysis, this assumption has become married to the ‘wisdom of crowds’. Like those Elvis fans, there is a feeling that a great mass of people (or conclusions based on great masses of people) can’t be wrong, if unbiased algorithms are mining their statistics. Such population-based conclusions can only cause society to positively evolve. In many areas of society – policing, defence, law, education, health, childcare, transport and the media – this implicit belief has led to billions being invested in research and development for the application of big data analytics (US$20–30 billion in 2017, according to McKinsey1).


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Kill All Normies: Online Culture Wars From 4Chan and Tumblr to Trump and the Alt-Right by Angela Nagle

4chan, A Declaration of the Independence of Cyberspace, affirmative action, anti-communist, battle of ideas, Bernie Sanders, bitcoin, Black Lives Matter, capitalist realism, citizen journalism, crony capitalism, death of newspapers, DIY culture, Donald Trump, Evgeny Morozov, feminist movement, Gabriella Coleman, game design, Hacker Ethic, Herbert Marcuse, hive mind, John Perry Barlow, Julian Assange, Kickstarter, lolcat, mass immigration, moral panic, Nelson Mandela, Norman Mailer, Occupy movement, Oklahoma City bombing, open borders, Overton Window, post-industrial society, pre–internet, Ronald Reagan, sexual politics, Silicon Valley, Social Justice Warrior, Steve Bannon, The Wisdom of Crowds, WikiLeaks

Compare the first election won by Obama, in which social media devotees reproduced the iconic but official blue-and-red stylized stencil portrait of the new president with HOPE printed across the bottom, a portrait created by artist Shepard Fairey and approved by the official Obama campaign, to the bursting forth of irreverent mainstream-baffling meme culture during the last race, in which the Bernie’s Dank Meme Stash Facebook page and The Donald subreddit defined the tone of the race for a young and newly politicized generation, with the mainstream media desperately trying to catch up with a subcultural in-joke style to suit two emergent anti-establishment waves of the right and left. Writers like Manuel Castells and numerous commentators in the Wired magazine milieu told us of the coming of a networked society, in which old hierarchical models of business and culture would be replaced by the wisdom of crowds, the swarm, the hive mind, citizen journalism and user-generated content. They got their wish, but it’s not quite the utopian vision they were hoping for. As old media dies, gatekeepers of cultural sensibilities and etiquette have been overthrown, notions of popular taste maintained by a small creative class are now perpetually outpaced by viral online content from obscure sources, and culture industry consumers have been replaced by constantly online, instant content producers.


pages: 147 words: 37,622

Personal Kanban: Mapping Work, Navigating Life by Jim Benson, Tonianne Demaria Barry

Abraham Maslow, Albert Einstein, Asperger Syndrome, Bluma Zeigarnik, corporate governance, Howard Rheingold, intangible asset, job satisfaction, Kaizen: continuous improvement, Kanban, Ken Thompson, pattern recognition, performance metric, The Wisdom of Crowds, urban planning, Yogi Berra

Stay loose enough from the flow that you can observe it, modify, and improve it. ~ Donald Rumsfeld FLOW: WORK’S NATURAL MOVEMENT Flow: The natural progress of work Cadence: The predictable and regular elements of work Slack: The gaps between work that make flow possible The Tao of Physics. Flow. Freakonomics. Nonzero. Predictably Irrational. The Wisdom of Crowds. There’s no shortage of best sellers expressing how the world is awash in both chaos and order. Much like the quote from Mr. Rumsfeld, these books suggest that observing a specific event is often less informative than observing a stream of events. It is precisely this flow which gives us context, and that context leads to clarity.


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Quiet: The Power of Introverts in a World That Can't Stop Talking by Susan Cain

8-hour work day, Albert Einstein, An Inconvenient Truth, AOL-Time Warner, Asperger Syndrome, autism spectrum disorder, Bill Gates: Altair 8800, call centre, crowdsourcing, David Brooks, delayed gratification, deliberate practice, emotional labour, game design, hive mind, index card, indoor plumbing, Isaac Newton, knowledge economy, knowledge worker, longitudinal study, Mahatma Gandhi, mass immigration, Menlo Park, meta-analysis, Mikhail Gorbachev, Nelson Mandela, new economy, popular electronics, Ralph Waldo Emerson, ride hailing / ride sharing, Rosa Parks, selective serotonin reuptake inhibitor (SSRI), shareholder value, Silicon Valley, Steve Jobs, Steve Wozniak, telemarketer, The Wisdom of Crowds, traveling salesman, twin studies, Walter Mischel, web application, white flight

On the Internet, wondrous creations were produced via shared brainpower: Linux, the open-source operating system; Wikipedia, the online encyclopedia; MoveOn.org, the grassroots political movement. These collective productions, exponentially greater than the sum of their parts, were so awe-inspiring that we came to revere the hive mind, the wisdom of crowds, the miracle of crowdsourcing. Collaboration became a sacred concept—the key multiplier for success. But then we took things a step further than the facts called for. We came to value transparency and to knock down walls—not only online but also in person. We failed to realize that what makes sense for the asynchronous, relatively anonymous interactions of the Internet might not work as well inside the face-to-face, politically charged, acoustically noisy confines of an open-plan office.

We also see talkers as leaders: Simon Taggar et al., “Leadership Emergence in Autonomous Work Teams: Antecedents and Outcomes,” Personnel Psychology 52, no. 4 (Winter 1999): 899–926. (“The person that speaks most is likely to be perceived as the leader.”) 16. The more a person talks, the more other group members: James Surowiecki, The Wisdom of Crowds (New York: Doubleday Anchor, 2005), 187. 17. It also helps to speak fast: Howard Giles and Richard L. Street Jr., “Communicator Characteristics and Behavior,” in M. L. Knapp and G. R. Miller, eds., Handbook of Interpersonal Communication, 2nd ed. (Thousand Oaks, CA: Sage, 1994), 103–61. 18. college students were asked to solve math problems: Cameron Anderson and Gavin Kilduff, “Why Do Dominant Personalities Attain Influence in Face-to-Face Groups?


pages: 402 words: 110,972

Nerds on Wall Street: Math, Machines and Wired Markets by David J. Leinweber

"World Economic Forum" Davos, AI winter, Alan Greenspan, algorithmic trading, AOL-Time Warner, Apollo 11, asset allocation, banking crisis, barriers to entry, Bear Stearns, Big bang: deregulation of the City of London, Bob Litterman, book value, business cycle, butter production in bangladesh, butterfly effect, buttonwood tree, buy and hold, buy low sell high, capital asset pricing model, Charles Babbage, citizen journalism, collateralized debt obligation, Cornelius Vanderbilt, corporate governance, Craig Reynolds: boids flock, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Danny Hillis, demand response, disintermediation, distributed generation, diversification, diversified portfolio, electricity market, Emanuel Derman, en.wikipedia.org, experimental economics, fake news, financial engineering, financial innovation, fixed income, Ford Model T, Gordon Gekko, Hans Moravec, Herman Kahn, implied volatility, index arbitrage, index fund, information retrieval, intangible asset, Internet Archive, Ivan Sutherland, Jim Simons, John Bogle, John Nash: game theory, Kenneth Arrow, load shedding, Long Term Capital Management, machine readable, machine translation, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, market fragmentation, market microstructure, Mars Rover, Metcalfe’s law, military-industrial complex, moral hazard, mutually assured destruction, Myron Scholes, natural language processing, negative equity, Network effects, optical character recognition, paper trading, passive investing, pez dispenser, phenotype, prediction markets, proprietary trading, quantitative hedge fund, quantitative trading / quantitative finance, QWERTY keyboard, RAND corporation, random walk, Ray Kurzweil, Reminiscences of a Stock Operator, Renaissance Technologies, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Metcalfe, Ronald Reagan, Rubik’s Cube, Savings and loan crisis, semantic web, Sharpe ratio, short selling, short squeeze, Silicon Valley, Small Order Execution System, smart grid, smart meter, social web, South Sea Bubble, statistical arbitrage, statistical model, Steve Jobs, Steven Levy, stock buybacks, Tacoma Narrows Bridge, the scientific method, The Wisdom of Crowds, time value of money, tontine, too big to fail, transaction costs, Turing machine, two and twenty, Upton Sinclair, value at risk, value engineering, Vernor Vinge, Wayback Machine, yield curve, Yogi Berra, your tax dollars at work

When every other customer complains about meeting a man with a stomach pump, you’re better off packing your own lunch. Markets themselves are a form of collective intelligence (CI), and since transactions occur, they clearly arrive at prices seen as fair by buyers and sellers alike for everything from stocks to Pez dispensers (the first eBay merchandise). A recent book by James Surowiecki, The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations (Random House, 2004) has nearly 300 pages of examples of group wisdom. One such example is the television quiz show Who Wants to Be a Millionaire. Contestants are asked a series of increasingly difficult 227 228 Nerds on Wall Str eet questions, worth increasingly large payoffs if answered correctly.

The funniest line in that skit, a long disconnected utterance that failed to parse as English, was taken verbatim from the actual interview. 3. Treynor is widely regarded as having been a shoo-in to have shared the 1990 Nobel Prize in economics had he only published a paper that was sitting in his desk drawer. 4. Still in print after 150 years (New York: Three Rivers Press, 1995). 5. James Surowiecki, The Wisdom of Crowds:Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations (New York: Random House, 2004), xix. 6. Used in other chapters, this is a fabulous site founded to allow the historians of the Internet era to have something to use. The Internet Archive is at www.archive.org, and also has an extensive collection of nearly 400,000 free music downloads.


pages: 829 words: 186,976

The Signal and the Noise: Why So Many Predictions Fail-But Some Don't by Nate Silver

airport security, Alan Greenspan, Alvin Toffler, An Inconvenient Truth, availability heuristic, Bayesian statistics, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, big-box store, Black Monday: stock market crash in 1987, Black Swan, Boeing 747, book value, Broken windows theory, business cycle, buy and hold, Carmen Reinhart, Charles Babbage, classic study, Claude Shannon: information theory, Climategate, Climatic Research Unit, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, computer age, correlation does not imply causation, Credit Default Swap, credit default swaps / collateralized debt obligations, cuban missile crisis, Daniel Kahneman / Amos Tversky, disinformation, diversification, Donald Trump, Edmond Halley, Edward Lorenz: Chaos theory, en.wikipedia.org, equity premium, Eugene Fama: efficient market hypothesis, everywhere but in the productivity statistics, fear of failure, Fellow of the Royal Society, Ford Model T, Freestyle chess, fudge factor, Future Shock, George Akerlof, global pandemic, Goodhart's law, haute cuisine, Henri Poincaré, high batting average, housing crisis, income per capita, index fund, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), Internet Archive, invention of the printing press, invisible hand, Isaac Newton, James Watt: steam engine, Japanese asset price bubble, John Bogle, John Nash: game theory, John von Neumann, Kenneth Rogoff, knowledge economy, Laplace demon, locking in a profit, Loma Prieta earthquake, market bubble, Mikhail Gorbachev, Moneyball by Michael Lewis explains big data, Monroe Doctrine, mortgage debt, Nate Silver, negative equity, new economy, Norbert Wiener, Oklahoma City bombing, PageRank, pattern recognition, pets.com, Phillips curve, Pierre-Simon Laplace, Plato's cave, power law, prediction markets, Productivity paradox, proprietary trading, public intellectual, random walk, Richard Thaler, Robert Shiller, Robert Solow, Rodney Brooks, Ronald Reagan, Saturday Night Live, savings glut, security theater, short selling, SimCity, Skype, statistical model, Steven Pinker, The Great Moderation, The Market for Lemons, the scientific method, The Signal and the Noise by Nate Silver, The Wisdom of Crowds, Thomas Bayes, Thomas Kuhn: the structure of scientific revolutions, Timothy McVeigh, too big to fail, transaction costs, transfer pricing, University of East Anglia, Watson beat the top human players on Jeopardy!, Wayback Machine, wikimedia commons

Smith’s “invisible hand” might be thought of as a Bayesian process, in which prices are gradually updated in response to changes in supply and demand, eventually reaching some equilibrium. Or, Bayesian reasoning might be thought of as an “invisible hand” wherein we gradually update and improve our beliefs as we debate our ideas, sometimes placing bets on them when we can’t agree. Both are consensus-seeking processes that take advantage of the wisdom of crowds. It might follow, then, that markets are an especially good way to make predictions. That’s really what the stock market is: a series of predictions about the future earnings and dividends of a company.8 My view is that this notion is mostly right most of the time. I advocate the use of betting markets for forecasting economic variables like GDP, for instance.

The heuristic of “follow the crowd, especially when you don’t know any better” usually works pretty well. And yet, there are those times when we become too trusting of our neighbors—like in the 1980s “Just Say No” commercials, we do something because Everyone Else Is Doing it Too. Instead of our mistakes canceling one another out, which is the idea behind the wisdom of crowds,74 they instead begin to reinforce one another and spiral out of control. The blind lead the blind and everyone falls off a cliff. This phenomenon occurs fairly rarely, but it can be quite disastrous when it does. Sometimes we may also infer that the most confident-acting neighbor must be the best forecaster and follow his lead—whether he knows what he’s doing.

For 1980, they are taken from data on the market capitalization within the New York Stock Exchange (“Annual reported volume, turnover rate, reported trades [mils. of shares],” http://www.nyxdata.com/nysedata/asp/factbook/viewer_edition.asp?mode=table&key=2206&category=4) and multiplied by the ratio of all U.S. stock holdings to NYSE market capitalization as of 1988, per World Bank data. All figures are adjusted to 2007 dollars. 74. James Surowiecki, The Wisdom of Crowds (New York: Random House, 2004). 75. Silver, “Intrade Betting Is Suspicious.” 76. Marko Kolanovic, Davide Silvestrini, Tony SK Lee, and Michiro Naito, “Rise of Cross-Asset Correlations,” Global Equity Derivatives and Delta One Strategy, J.P. Morgan, May 16, 2011. http://www.cboe.com/Institutional/JPMCrossAssetCorrelations.pdf. 77.


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The Ascent of Money: A Financial History of the World by Niall Ferguson

Admiral Zheng, Alan Greenspan, An Inconvenient Truth, Andrei Shleifer, Asian financial crisis, asset allocation, asset-backed security, Atahualpa, bank run, banking crisis, banks create money, Bear Stearns, Black Monday: stock market crash in 1987, Black Swan, Black-Scholes formula, Bonfire of the Vanities, Bretton Woods, BRICs, British Empire, business cycle, capital asset pricing model, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, classic study, collateralized debt obligation, colonial exploitation, commoditize, Corn Laws, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, Daniel Kahneman / Amos Tversky, deglobalization, diversification, diversified portfolio, double entry bookkeeping, Edmond Halley, Edward Glaeser, Edward Lloyd's coffeehouse, equity risk premium, financial engineering, financial innovation, financial intermediation, fixed income, floating exchange rates, Fractional reserve banking, Francisco Pizarro, full employment, Future Shock, German hyperinflation, Greenspan put, Herman Kahn, Hernando de Soto, high net worth, hindsight bias, Home mortgage interest deduction, Hyman Minsky, income inequality, information asymmetry, interest rate swap, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, iterative process, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", John Meriwether, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labour mobility, Landlord’s Game, liberal capitalism, London Interbank Offered Rate, Long Term Capital Management, low interest rates, market bubble, market fundamentalism, means of production, Mikhail Gorbachev, Modern Monetary Theory, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, Naomi Klein, National Debt Clock, negative equity, Nelson Mandela, Nick Bostrom, Nick Leeson, Northern Rock, Parag Khanna, pension reform, price anchoring, price stability, principal–agent problem, probability theory / Blaise Pascal / Pierre de Fermat, profit motive, quantitative hedge fund, RAND corporation, random walk, rent control, rent-seeking, reserve currency, Richard Thaler, risk free rate, Robert Shiller, rolling blackouts, Ronald Reagan, Savings and loan crisis, savings glut, seigniorage, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, spice trade, stocks for the long run, structural adjustment programs, subprime mortgage crisis, tail risk, technology bubble, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Bayes, Thomas Malthus, Thorstein Veblen, tontine, too big to fail, transaction costs, two and twenty, undersea cable, value at risk, W. E. B. Du Bois, Washington Consensus, Yom Kippur War

The correct answer is 5 pence, since only with a bat worth £1.05 and a ball worth 5 pence are both conditions satisfied.12 If any field has the potential to revolutionize our understanding of the way financial markets work, it must surely be the burgeoning discipline of behavioural finance.13 It is far from clear how much of the body of work derived from the efficient markets hypothesis can survive this challenge.14 Those who put their faith in the ‘wisdom of crowds’15 mean no more than that a large group of people is more likely to make a correct assessment than a small group of supposed experts. But that is not saying much. The old joke that ‘Macroeconomists have successfully predicted nine of the last five recessions’ is not so much a joke as a dispiriting truth about the difficulty of economic forecasting.16 Meanwhile, serious students of human psychology will expect as much madness as wisdom from large groups of people.17 A case in point must be the near-universal delusion among investors in the first half of 2007 that a major liquidity crisis could not occur (see Introduction).

Mauboussin, More Than You Know: Finding Financial Wisdom in Unconventional Places (New York / Chichester, 2006). 12 Mark Buchanan, The Social Atom: Why the Rich Get Richer, Cheaters Get Caught, and Your Neighbor Usually Looks Like You (New York, 2007), p. 54. 13 For an introduction, see Andrei Shleifer, Inefficient Markets: An Introduction to Behavioral Finance (Oxford, 2000). For some practical applications see Richard H. Thaler and Cass R. Sunstein, Nudge: Improving Decisions About Health, Wealth, and Happiness (New Haven, 2008). 14 See Peter Bernstein, Capital Ideas Evolving (New York, 2007). 15 See for example James Surowiecki, The Wisdom of Crowds (New York, 2005); Ian Ayres, Supercrunchers: How Anything Can Be Predicted (London, 2007). 16 Daniel Gross, ‘The Forecast for Forecasters is Dismal’, New York Times, 4 March 2007. 17 The classic work, first published in 1841, is Charles MacKay, Extraordinary Popular Delusions and the Madness of Crowds (New York, 2003 [1841]). 18 Yudkowsky, ‘Cognitive Biases’, pp. 110f. 19 For an introduction to Lo’s work, see Bernstein, Capital Ideas Evolving , ch. 4.


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A Man for All Markets by Edward O. Thorp

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", 3Com Palm IPO, Alan Greenspan, Albert Einstein, asset allocation, Bear Stearns, beat the dealer, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, Black-Scholes formula, book value, Brownian motion, buy and hold, buy low sell high, caloric restriction, caloric restriction, carried interest, Chuck Templeton: OpenTable:, Claude Shannon: information theory, cognitive dissonance, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Edward Thorp, Erdős number, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, Garrett Hardin, George Santayana, German hyperinflation, Glass-Steagall Act, Henri Poincaré, high net worth, High speed trading, index arbitrage, index fund, interest rate swap, invisible hand, Jarndyce and Jarndyce, Jeff Bezos, John Bogle, John Meriwether, John Nash: game theory, junk bonds, Kenneth Arrow, Livingstone, I presume, Long Term Capital Management, Louis Bachelier, low interest rates, margin call, Mason jar, merger arbitrage, Michael Milken, Murray Gell-Mann, Myron Scholes, NetJets, Norbert Wiener, PalmPilot, passive investing, Paul Erdős, Paul Samuelson, Pluto: dwarf planet, Ponzi scheme, power law, price anchoring, publish or perish, quantitative trading / quantitative finance, race to the bottom, random walk, Renaissance Technologies, RFID, Richard Feynman, risk-adjusted returns, Robert Shiller, rolodex, Sharpe ratio, short selling, Silicon Valley, Stanford marshmallow experiment, statistical arbitrage, stem cell, stock buybacks, stocks for the long run, survivorship bias, tail risk, The Myth of the Rational Market, The Predators' Ball, the rule of 72, The Wisdom of Crowds, too big to fail, Tragedy of the Commons, uptick rule, Upton Sinclair, value at risk, Vanguard fund, Vilfredo Pareto, Works Progress Administration

The Ned polling method works remarkably well in certain situations, like guessing the number of beans in a barrel, or the weight of a pumpkin. The average of all the guesses by the crowd is typically much better than most of the individual guesses. This phenomenon has been called the wisdom of crowds. But like most simplifications, this has a flip side, as in the Madoff case. Here there were just two answers, fraudster or investment genius. The crowd voted for investment genius and got it wrong. I call the flip side to the wisdom of crowds the lunacy of lemmings. By 1991, I had simplified to a staff of four people. Steve Mizusawa was hedging Japanese warrants, with some assistance from me. I was also managing a portfolio of hedge funds for myself, with help from Judy McCoy.


pages: 538 words: 141,822

The Net Delusion: The Dark Side of Internet Freedom by Evgeny Morozov

"World Economic Forum" Davos, A Declaration of the Independence of Cyberspace, Alvin Toffler, Ayatollah Khomeini, Berlin Wall, borderless world, Buckminster Fuller, Californian Ideology, Cass Sunstein, citizen journalism, cloud computing, cognitive dissonance, Columbine, computer age, conceptual framework, crowdsourcing, digital divide, disinformation, Dissolution of the Soviet Union, don't be evil, Evgeny Morozov, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, global village, Google Earth, Herbert Marcuse, illegal immigration, invention of radio, invention of the printing press, invisible hand, John Markoff, John Perry Barlow, John von Neumann, lolcat, Marshall McLuhan, Mitch Kapor, Naomi Klein, Network effects, new economy, New Urbanism, off-the-grid, Panopticon Jeremy Bentham, peer-to-peer, pirate software, pre–internet, Productivity paradox, public intellectual, RAND corporation, Robert Solow, Ronald Reagan, Ronald Reagan: Tear down this wall, Silicon Valley, Silicon Valley startup, Sinatra Doctrine, Skype, Slavoj Žižek, social graph, Steve Jobs, Streisand effect, technological determinism, technoutopianism, TED Talk, The Wisdom of Crowds, urban planning, Washington Consensus, WikiLeaks, women in the workforce

Is there a danger that the popularity of Facebook might nudge activists toward embracing some kind of “group fetishism,” in which they opt for a group solution to problems that could be solved much faster and better by solo artists? Now that almost every problem could be tackled by collective action rather than individually, is there a risk that a collective urge might also delay the solution? Before the Silicon Valley crowd went gung-ho about the wisdom of crowds, social psychologists and management experts were already studying conditions under which individuals who work as groups may be less effective than the same individuals working solo. One of the first people to discover and theorize this discrepancy was the French agricultural engineer Max Ringelmann.

Hearing of Ringelmann’s experiments today, one can’t help noticing the parallels to much of today’s Facebook activism. With the power of Facebook and Twitter at their fingertips, many activists may choose to tackle a problem collectively when tackling it individually would make more strategic sense. But just as “the madness of crowds” gives rise to “the wisdom of crowds” only under certain, carefully delineated social conditions, “social loafing” leads to synergy only once certain conditions are met (it’s possible to monitor and evaluate individual contributions, and the group members are aware that such evaluation is going on; tasks to be performed are unique and difficult, etc.)


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The People vs Tech: How the Internet Is Killing Democracy (And How We Save It) by Jamie Bartlett

Ada Lovelace, Airbnb, AlphaGo, Amazon Mechanical Turk, Andrew Keen, autonomous vehicles, barriers to entry, basic income, Bernie Sanders, Big Tech, bitcoin, Black Lives Matter, blockchain, Boris Johnson, Californian Ideology, Cambridge Analytica, central bank independence, Chelsea Manning, cloud computing, computer vision, creative destruction, cryptocurrency, Daniel Kahneman / Amos Tversky, data science, deep learning, DeepMind, disinformation, Dominic Cummings, Donald Trump, driverless car, Edward Snowden, Elon Musk, Evgeny Morozov, fake news, Filter Bubble, future of work, general purpose technology, gig economy, global village, Google bus, Hans Moravec, hive mind, Howard Rheingold, information retrieval, initial coin offering, Internet of things, Jeff Bezos, Jeremy Corbyn, job automation, John Gilmore, John Maynard Keynes: technological unemployment, John Perry Barlow, Julian Assange, manufacturing employment, Mark Zuckerberg, Marshall McLuhan, Menlo Park, meta-analysis, mittelstand, move fast and break things, Network effects, Nicholas Carr, Nick Bostrom, off grid, Panopticon Jeremy Bentham, payday loans, Peter Thiel, post-truth, prediction markets, QR code, ransomware, Ray Kurzweil, recommendation engine, Renaissance Technologies, ride hailing / ride sharing, Robert Mercer, Ross Ulbricht, Sam Altman, Satoshi Nakamoto, Second Machine Age, sharing economy, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, Silicon Valley startup, smart cities, smart contracts, smart meter, Snapchat, Stanford prison experiment, Steve Bannon, Steve Jobs, Steven Levy, strong AI, surveillance capitalism, TaskRabbit, tech worker, technological singularity, technoutopianism, Ted Kaczynski, TED Talk, the long tail, the medium is the message, the scientific method, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, too big to fail, ultimatum game, universal basic income, WikiLeaks, World Values Survey, Y Combinator, you are the product

Chapter 2: The Global Village 1 Marshall McLuhan, The Gutenberg Galaxy: The Making of Typographic Man (University of Toronto Press, 1962). 2 Eric Norden, ‘The Playboy Interview: Marshall McLuhan’, Playboy, March 1969. 3 James Madison, ‘Federalist No. 10 – The Utility of the Union as a Safeguard Against Domestic Faction and Insurrection’, 23 November 1787. 4 Thomas Hawk, ‘How to unleash the wisdom of crowds’, www.theconversation.com, 9 February 2016. 5 See especially the following authors: Zeynep Tufekci, Eli Pariser and Evgeny Morozov. On ‘post-truth’, see books by Matthew D’Ancona, James Ball and Evan Davies. 6 Bruce Drake, ‘Six new findings about Millennials’, www.pewresearch.org, 7 March 2014.


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Intertwingled: Information Changes Everything by Peter Morville

A Pattern Language, Airbnb, Albert Einstein, Arthur Eddington, augmented reality, Bernie Madoff, bike sharing, Black Swan, business process, Cass Sunstein, cognitive dissonance, collective bargaining, Computer Lib, disinformation, disruptive innovation, folksonomy, holacracy, index card, information retrieval, Internet of things, Isaac Newton, iterative process, Jane Jacobs, Jeff Hawkins, John Markoff, Kanban, Lean Startup, Lyft, messenger bag, minimum viable product, Mother of all demos, Nelson Mandela, Paul Graham, peer-to-peer, Project Xanadu, quantum entanglement, RFID, Richard Thaler, ride hailing / ride sharing, Schrödinger's Cat, self-driving car, semantic web, sharing economy, Silicon Valley, Silicon Valley startup, single source of truth, source of truth, Steve Jobs, Stewart Brand, systems thinking, Ted Nelson, the Cathedral and the Bazaar, The Death and Life of Great American Cities, the scientific method, The Wisdom of Crowds, theory of mind, uber lyft, urban planning, urban sprawl, Vannevar Bush, vertical integration, zero-sum game

Information systems aren’t just code. They are also about content and culture. We must select our frame of reference very carefully, because the solution is shaped by how we define the problem. This step is often skipped by eager teams that are ready to roll. We’re in an era of imbalance where the wisdom of crowds drowns out individual insight. We need both. We should embrace teamwork, prototypes, feedback, iteration, but we must also engage experts in research, planning, and design. We all know what it’s like to learn the hard way. We never forget the time we touched the hot stove. Initially we learn by experience.


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Wired for War: The Robotics Revolution and Conflict in the 21st Century by P. W. Singer

agricultural Revolution, Albert Einstein, Alvin Toffler, Any sufficiently advanced technology is indistinguishable from magic, Atahualpa, barriers to entry, Berlin Wall, Bill Joy: nanobots, Bletchley Park, blue-collar work, borderless world, Boston Dynamics, Charles Babbage, Charles Lindbergh, clean water, Craig Reynolds: boids flock, cuban missile crisis, digital divide, digital map, Dr. Strangelove, en.wikipedia.org, Ernest Rutherford, failed state, Fall of the Berlin Wall, Firefox, Ford Model T, Francisco Pizarro, Frank Gehry, friendly fire, Future Shock, game design, George Gilder, Google Earth, Grace Hopper, Hans Moravec, I think there is a world market for maybe five computers, if you build it, they will come, illegal immigration, industrial robot, information security, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), invention of gunpowder, invention of movable type, invention of the steam engine, Isaac Newton, Jacques de Vaucanson, job automation, Johann Wolfgang von Goethe, junk bonds, Law of Accelerating Returns, Mars Rover, Menlo Park, mirror neurons, Neal Stephenson, New Urbanism, Nick Bostrom, no-fly zone, PalmPilot, paperclip maximiser, pattern recognition, precautionary principle, private military company, RAND corporation, Ray Kurzweil, RFID, robot derives from the Czech word robota Czech, meaning slave, Rodney Brooks, Ronald Reagan, Schrödinger's Cat, Silicon Valley, social intelligence, speech recognition, Stephen Hawking, Strategic Defense Initiative, strong AI, technological singularity, The Coming Technological Singularity, The Wisdom of Crowds, Timothy McVeigh, Turing test, Vernor Vinge, Virgin Galactic, Wall-E, warehouse robotics, world market for maybe five computers, Yogi Berra

Adams, “The Real Military Revolution,” Parameters 30, no. 3 (2000). 231 “boids,” artificial birds Craig W. Reynolds, “An Evolved, Vision-Based Model of Obstacle Avoidance Behavior,” in Proceedings, ed. C. Langton (Redwood City, CA: Addison-Wesley, 1994). 231 follow three simple rules Adams, “The Real Military Revolution.” 232 “the wisdom of crowds” James Surowiecki, The Wisdom of Crowds: Why the Many Are Smarter than the Few and How Collective Wisdom Shapes Business, Economies, Societies, and Nations, 1st ed. (New York: Doubleday, 2004). 232 “We don’t want to copy” Tobey Grumet, “Robots Clean House,” Popular Mechanics 180, no. 11 (2003): 30. 232 “an unassailable wireless ‘Internet in the sky’” Lakshmi Sandhana, “The Drone Armies Are Coming,” Wired News, August 30, 2002, http://www.wired.com/science/discoveries/news/2002/08/54728. 232 “They should just go ahead” Scientist, interview, Peter W.

There are many other examples of how complex, self-organizing systems work outside of nature. One is how big cities like New York never run out of food, despite the fact that no one is in charge of creating a master plan for moving food into and around the city. Another is the odd phenomenon known as “the wisdom of crowds,” where a mass of relatively uninformed people tend to make smarter decisions in the aggregate than better-informed individuals do on their own. This explains how the index of the stock market beats almost every professional stock picker. Roboticists are now using these same approaches to get relatively unsophisticated robots to carry out very sophisticated tasks.


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The Empathic Civilization: The Race to Global Consciousness in a World in Crisis by Jeremy Rifkin

Abraham Maslow, agricultural Revolution, Albert Einstein, animal electricity, back-to-the-land, British Empire, carbon footprint, classic study, collaborative economy, death of newspapers, delayed gratification, distributed generation, emotional labour, en.wikipedia.org, energy security, feminist movement, Ford Model T, global village, Great Leap Forward, hedonic treadmill, hydrogen economy, illegal immigration, income inequality, income per capita, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), Internet Archive, invention of movable type, invention of the steam engine, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, Lewis Mumford, Mahatma Gandhi, Marshall McLuhan, means of production, megacity, meta-analysis, Milgram experiment, mirror neurons, Nelson Mandela, new economy, New Urbanism, Norbert Wiener, off grid, off-the-grid, out of africa, Peace of Westphalia, peak oil, peer-to-peer, planetary scale, Recombinant DNA, scientific management, scientific worldview, Simon Kuznets, Skype, smart grid, smart meter, social intelligence, supply-chain management, surplus humans, systems thinking, the medium is the message, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Tragedy of the Commons, transaction costs, upwardly mobile, uranium enrichment, working poor, World Values Survey

A “wiki workplace” refers to a collaborative venture involving scores, hundreds, and even thousands of people—some experts and others amateurs—usually across many different fields, who come together to share their ideas and problem-solve. These new fl at collaborative learning environments mobilize the collective wisdom of crowds, and their track record is impressive when compared to traditional hierarchically organized corporate learning environments. The phenomenon known as the “wisdom of crowds” is not something that just emerged with the advent of distributed computing technology. Francis Galton, a scientist best known for his championing of human eugenics—he was also Charles Darwin’s half cousin—was the first to grasp the importance of collaborative wisdom. In 1906, Galton was visiting a country fair in his home town of Plymouth, England.

“Distributed Computing: Grassroots Supercomputing.” Science. Vol. 308. No. 5723. May 6, 2005. pp. 810-813. 10 Ibid. 11 “List of Distributed Computing Projects.” Wikipedia. http://en.wikipedia.org/wiki/List_of_distributed_computing_projects 12 Bohannon. “Distributed Computing: Grassroots Supercomputing.” 13 Surowiecki, James. The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies, and Nations. New York: Doubleday, 2004. p. xiii. 14 Tapscott, Don, and Anthony D. Williams. Wikinomics: How Mass Collaboration Changes Everything. New York: Penguin, 2006. p. 8. 15 Ibid. p. 9. 16 Ibid. 17 Ibid. p. 13. 18 McGirt, Ellen.

William Sayers. Ann Arbor, MI: University of Michigan Press, 1999. Stone, Lawrence. The Family, Sex and Marriage in England 1500-1800. New York: Harper Torchbooks, 1977. Strang, Heather. Repair or Revenge: Victims and Restorative Justice. Oxford: Clarendon Press, 2002. Surowiecki, James. The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies, and Nations. New York: Doubleday, 2004. Suttie, Ian D. The Origins of Love and Hate. New York: Julian Press, 1952. Svenson, Ola, and A. J. Maule, eds. Time Pressure and Stress in Human Judgment and Decision Making.


pages: 188 words: 9,226

Collaborative Futures by Mike Linksvayer, Michael Mandiberg, Mushon Zer-Aviv

4chan, AGPL, Benjamin Mako Hill, British Empire, citizen journalism, cloud computing, collaborative economy, corporate governance, crowdsourcing, Debian, Eben Moglen, en.wikipedia.org, fake news, Firefox, informal economy, jimmy wales, Kickstarter, late capitalism, lolcat, loose coupling, Marshall McLuhan, means of production, Naomi Klein, Network effects, optical character recognition, packet switching, planned obsolescence, postnationalism / post nation state, prediction markets, Richard Stallman, semantic web, Silicon Valley, slashdot, Slavoj Žižek, stealth mode startup, technoutopianism, The future is already here, the medium is the message, The Wisdom of Crowds, web application, WikiLeaks, Yochai Benkler

Social Contracts and Mediation Academic research into the techno-social dynamics of Wikipedia shows clear emergent pa erns of leadership. For example the initial content and structure outlined by the first edit of an article are o en maintained through the many future edits years on. (A Ki ur, RE Kraut; Harnessing the Wisdom of Crowds in Wikipedia: Quality through Coordination) The governance mechanism of the Wiki so ware does not value one edit over the other. Yet, what is offered by the initial author is not just the initiative for the collaboration, it is also a leading guideline that implicitly coordinates the contributions that follow. 52 Much like a state, Wikipedia then uses social contracts to mediate the relationship of contributions to the collection as a whole.


pages: 486 words: 148,485

Being Wrong: Adventures in the Margin of Error by Kathryn Schulz

affirmative action, Alan Greenspan, anti-communist, banking crisis, Bear Stearns, behavioural economics, Bernie Madoff, Boeing 747, car-free, Cass Sunstein, cognitive dissonance, colonial rule, conceptual framework, cosmological constant, cuban missile crisis, Daniel Kahneman / Amos Tversky, dark matter, David Sedaris, desegregation, Johann Wolfgang von Goethe, lake wobegon effect, longitudinal study, mandatory minimum, mirror neurons, Pierre-Simon Laplace, Ronald Reagan, six sigma, stem cell, Steven Pinker, subprime mortgage crisis, Tenerife airport disaster, the scientific method, The Wisdom of Crowds, theory of mind, Thomas Kuhn: the structure of scientific revolutions, trade route

., 1886), lxxii–lxxiii. Thomas Gilovich. Thomas Gilovich, How We Know What Isn’t So: The Fallibility of Human Reason in Everyday Life (The Free Press, 1991), 112. Cass Sunstein. Cass Sunstein, Why Societies Need Dissent (Harvard University Press, 2005), v. James Surowiecki. James Surowiecki, The Wisdom of Crowds (Anchor Books, 2005), 43. John Locke and David Hume. This rejection of secondhand information as insufficient grounds for knowledge is part of the same epistemological tradition articulated by, among others, Descartes (who cautioned against believing anything based on scanty evidence) and William Clifford (James’s foil in “The Will To Believe”).

* To be clear, Gilovich, Surowiecki, and Sunstein all acknowledge serious limitations to this follow-the-crowd logic. Among other problems, Gilovich points out, we tend to assume that most rational people believe what we believe, so our sense of the consensus of the crowd might itself be in error. Surowiecki believes strongly in the wisdom of crowds—he is the author of a 2004 book by that name—but only if their decisions reflect the aggregation of many independently developed beliefs, rather than the belief of a few people snowballing into the belief of the masses. Sunstein, meanwhile, acknowledges the potential utility of conformity largely as a preamble to exposing its dangers, and especially its political dangers—which is the central theme of his own book, Why Societies Need Dissent


pages: 498 words: 145,708

Consumed: How Markets Corrupt Children, Infantilize Adults, and Swallow Citizens Whole by Benjamin R. Barber

"World Economic Forum" Davos, Abraham Maslow, addicted to oil, AltaVista, American ideology, An Inconvenient Truth, AOL-Time Warner, Berlin Wall, Bertrand Russell: In Praise of Idleness, Bill Gates: Altair 8800, bread and circuses, business cycle, Celebration, Florida, collective bargaining, creative destruction, David Brooks, delayed gratification, digital divide, do well by doing good, Donald Trump, double entry bookkeeping, Dr. Strangelove, G4S, game design, George Gilder, Gordon Gekko, greed is good, Herbert Marcuse, Hernando de Soto, illegal immigration, informal economy, invisible hand, John Perry Barlow, Joseph Schumpeter, laissez-faire capitalism, late capitalism, liberal capitalism, Marc Andreessen, McJob, microcredit, Naomi Klein, new economy, New Journalism, Norbert Wiener, nuclear winter, Panopticon Jeremy Bentham, Paradox of Choice, pattern recognition, presumed consent, profit motive, race to the bottom, Ralph Nader, retail therapy, road to serfdom, Robert Bork, Ronald Reagan, Saturday Night Live, Silicon Valley, SimCity, spice trade, Steve Jobs, telemarketer, The Fortune at the Bottom of the Pyramid, the market place, The Wisdom of Crowds, Thomas L Friedman, Thorstein Veblen, trade route, Tyler Cowen, vertical integration, Virgin Galactic, X Prize

Rather, it generates an ethos of schizophrenia that helps condition the attitudes and behavior it requires for its own survival. It fosters “me” thinking on the model of the narcissistic child and discourages “we” thinking of the kind deliberative grown-up citizens recognize as wisdom and that constitutes what James Surowiecki (business columnist for The New Yorker) has called “the wisdom of crowds”—a wisdom that rests on “diversity and independence” that allow “disagreement and contest.”22 Consumerism thus builds psychic monkey traps into its free-range marketplace. If the attitudes and behaviors that result turn out to undermine other important cultural values, which however are extraneous to capitalism’s concerns—however deeply relevant they may be to moral and spiritual frameworks and to the shaping of an ideal public culture—too bad.

Postwar Harvard political theorist Louis Hartz dismissed the Tocquevillian obsession with the tyranny of the majority by noting that the much maligned American majority “has been an amiable shepherd dog kept forever on a lion’s leash” (Louis Hartz, The Liberal Tradition in America: An Interpretation of American Political Thought Since the Revolution [New York: Harcourt, Brace, & Company, 1955], p. 129). 21. Lizabeth Cohen, A Consumers’ Republic: The Politics of Mass Consumption in Postwar America (New York: Alfred A. Knopf, 2003). 22. James Surowiecki, The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies, and Nations (New York: Doubleday, 2004), p. xix. 23. Sigmund Freud, Civilization and Its Discontents (edited and translated by J. Strachey; New York: W. W. Norton, 1961), pp. 55, 59. Freud’s grand schematic no longer has much creditability in the fields of psychology and psychotherapy, but it remains useful as a cultural metaphor for the impact of repression, guilt, regression, and infantilization in political culture; that is to say, it offers what Freud calls “a pathology of cultural communities” that illuminates what I here am calling the infantilist ethos. 24.


pages: 629 words: 142,393

The Future of the Internet: And How to Stop It by Jonathan Zittrain

A Declaration of the Independence of Cyberspace, algorithmic bias, Amazon Mechanical Turk, Andy Kessler, barriers to entry, behavioural economics, book scanning, Brewster Kahle, Burning Man, c2.com, call centre, Cass Sunstein, citizen journalism, Citizen Lab, Clayton Christensen, clean water, commoditize, commons-based peer production, corporate governance, Daniel Kahneman / Amos Tversky, digital divide, disruptive innovation, distributed generation, en.wikipedia.org, end-to-end encryption, Firefox, folksonomy, Free Software Foundation, game design, Hacker Ethic, Howard Rheingold, Hush-A-Phone, illegal immigration, index card, informal economy, information security, Internet Archive, jimmy wales, John Markoff, John Perry Barlow, license plate recognition, loose coupling, mail merge, Morris worm, national security letter, old-boy network, One Laptop per Child (OLPC), OSI model, packet switching, peer-to-peer, post-materialism, pre–internet, price discrimination, profit maximization, radical decentralization, Ralph Nader, RFC: Request For Comment, RFID, Richard Stallman, Richard Thaler, risk tolerance, Robert Bork, Robert X Cringely, SETI@home, Silicon Valley, Skype, slashdot, software patent, Steve Ballmer, Steve Jobs, Ted Nelson, Telecommunications Act of 1996, the Cathedral and the Bazaar, the long tail, The Nature of the Firm, The Wisdom of Crowds, Tragedy of the Commons, web application, wikimedia commons, Yochai Benkler, zero-sum game

Michael Snow, Article Creation Restricted to Logged-in Editors (Dec. 5, 2005), http://en.wikipedia.org/wiki/Wikipedia:Wikipedia_Signpost/2005-12-05/Page_creationrestrictions. 51. See supra note 19. 52. Wikipedia, Congressional Staffer Edits to Wikipedia, http://en.wikipedia.org/wiki/Con gressional_staffer_edits_to_Wikipedia (as of June 1, 2007, 09:00 GMT). 53. Time on Wikipedia Was Wasted, LOWELL SUN, Jan. 28, 2006. 54. See generally JAMES SUROWIECKI, THE WISDOM OF CROWDS (2004). 55. Centiare, Directory: MyWikiBiz, http://www.centiare.eom/Directory:MyWikiBiz (as of June 1, 2007, 09:05 GMT). 56. Id. 57. Wikipedia, User Talk:MyWikiBiz, http://en.wikipedia.Org/wild/User_talk:MyWikiBiz/Archive_1 (as of June 1, 2007, 09:05 GMT). 58. E-mail from Jimmy Wales, founder, Wikipedia, to WikiEN-1 mailing list, about My WikiBiz (Aug. 9, 2006, 02:58 PM), http://www.nabble.com/MyWikiBiz-tf2080660.html 59.

See John Borland, See Who’s Editing Wikipedia, Wired.com, Aug. 15, 2007, http://www.wired.com/politics/onlinerights/news/2007/08/wiki_tracker (explaining the mechanics of Wikiscanner); Posting of Kevin Poulsen to meat level, Vote on the Most Shameful Wikipedia Spin Jobs, Wired.com, http://blog.wired.com/27bstroke6/wikiwatch/ (Aug. 13, 2007, 23:03 GMT) (curating a user-contributed library of particularly notable instances of organizational censorship on Wikipedia). 4. See generally James Surowiecki, THE WISDOM OF CROWDS (2004). For a discussion of communitarian views of democratic citizenship and participatory meaning-making, see, for example, Michael Walzer, Response, in PLURALISM, JUSTICE, AND EQUALITY 282 (David Miller & Michael Walzer eds., 1993). 5. Communitarians have championed citizens’ role in shaping their communities.


pages: 509 words: 147,998

The Geeks Shall Inherit the Earth: Popularity, Quirk Theory, and Why Outsiders Thrive After High School by Alexandra Robbins

airport security, Albert Einstein, Columbine, game design, hive mind, it's over 9,000, Larry Ellison, messenger bag, out of africa, selective serotonin reuptake inhibitor (SSRI), Skype, Slavoj Žižek, social intelligence, Steve Jobs, Steve Wozniak, The Wisdom of Crowds, trickle-down economics

Yet many perceived popular students demand that group members stick to the same bland fare. In the school setting, the higher a group’s status, the more likely it is to require unanimity. “The more influence a group’s members exert on each other . . . the less likely it is that the group’s decisions will be wise ones,” journalist James Surowiecki wrote in The Wisdom of Crowds. “The more influence we exert on each other, the more likely it is that we will believe the same things and make the same mistakes.” The conformity that tends to characterize student social circles, then, negates many of the benefits of belonging to a group in the first place. It is arguable that outcasts are not only courageous, not only crucial, valuable contributors to society, but also, in a way, lucky.

“The more diverse the group”: Ibid. Note: Diverse groups do not polarize. See, for example, Fishkin, James S. and Luskin, Robert C. “Experimenting with a Democratic Ideal: Deliberative Polling and Public Opinion,” Acta Politica, Vol. 40, 2005. “The more influence a group’s members”: See Surowiecki, James. The Wisdom of Crowds, New York: First Anchor Books, 2005. Acknowledgments I am exceptionally lucky to have supportive parents who have always encouraged me to be myself and clearly communicated that they love me not despite my goofy idiosyncrasies, but because those quirks help to make me who I am. A line on an acknowledgments page is not nearly enough to thank them.


pages: 579 words: 160,351

Breaking News: The Remaking of Journalism and Why It Matters Now by Alan Rusbridger

"World Economic Forum" Davos, accounting loophole / creative accounting, Airbnb, Andy Carvin, banking crisis, Bellingcat, Bernie Sanders, Bletchley Park, Boris Johnson, Brexit referendum, Cambridge Analytica, centre right, Chelsea Manning, citizen journalism, country house hotel, cross-subsidies, crowdsourcing, data science, David Attenborough, David Brooks, death of newspapers, Donald Trump, Doomsday Book, Double Irish / Dutch Sandwich, Downton Abbey, Edward Snowden, Etonian, Evgeny Morozov, fake news, Filter Bubble, folksonomy, forensic accounting, Frank Gehry, future of journalism, G4S, high net worth, information security, invention of movable type, invention of the printing press, Jeff Bezos, jimmy wales, Julian Assange, Large Hadron Collider, Laura Poitras, Mark Zuckerberg, Mary Meeker, Menlo Park, natural language processing, New Journalism, offshore financial centre, oil shale / tar sands, open borders, packet switching, Panopticon Jeremy Bentham, post-truth, pre–internet, ransomware, recommendation engine, Ruby on Rails, sexual politics, Silicon Valley, Skype, Snapchat, social web, Socratic dialogue, sovereign wealth fund, speech recognition, Steve Bannon, Steve Jobs, the long tail, The Wisdom of Crowds, Tim Cook: Apple, traveling salesman, upwardly mobile, WikiLeaks, Yochai Benkler

New York: Farrar, Straus and Giroux, 2012. Shenker, J. The Egyptians: A Radical Story. London: Penguin, 2016. Shirky, C. Here Comes Everybody. London: Penguin Books, 2008. Starr, P. The Creation of the Media: Political Origins of Modern Communications. New York: Basic Books, 2004. Surowiecki, J. The Wisdom of Crowds: Why the Many are Smarter than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations. New York: Doubleday, 2004. Tapscott, D. and Williams, A.D. Wikinomics: How Mass Collaboration Changes Everything. Old Saybrook, CT: Tantor Media, 2006. Walmsley, R. Peterloo: The Case Reopened.

‘Goodbye to the Age of Newspapers (Hello to a New Era of Corruption)’, New Republic, 4 March 2009; Paul Starr 3. Quoted in ‘Newspapers Last Bastion Against Political Corruption’; Oliver Burkeman, Guardian, 27 March 2009 4. A reasoned case for the power of ‘open information’ had been advanced in 2004 by the author James Surowiecki in his book The Wisdom of Crowds; see Bibliography. 5. An inquest found he had been unlawfully killed. The policeman who struck him was found not guilty after the jury deliberated for four days. He was dismissed from the police for ‘gross misconduct’ towards Tomlinson, and for using ‘excessive and unlawful force’. 6. Three G4S security guards were cleared of his manslaughter in 2014.


Digital Transformation at Scale: Why the Strategy Is Delivery by Andrew Greenway,Ben Terrett,Mike Bracken,Tom Loosemore

Airbnb, behavioural economics, bitcoin, blockchain, butterfly effect, call centre, chief data officer, choice architecture, cognitive dissonance, cryptocurrency, data science, Diane Coyle, en.wikipedia.org, fail fast, G4S, hype cycle, Internet of things, Kevin Kelly, Kickstarter, loose coupling, M-Pesa, machine readable, megaproject, minimum viable product, nudge unit, performance metric, ransomware, robotic process automation, Silicon Valley, social web, The future is already here, the long tail, the market place, The Wisdom of Crowds, work culture

The manual included design patterns, written guidance, job descriptions, links to communities of practice, and much more besides. It built goodwill, clarified meaning and created some collective ownership for what good looked like from right across the organisation. It should not be for a few people in a central team to keep defining the new rules on their own – the wisdom of crowds will ultimately provide a far richer view. The role of the central digital institution as a setter of standards should evolve over time to becoming a chairperson: making sure discussions on what good looks like don’t rumble on indefinitely without coming to a decision, and curating things that capture the current version of best practice.


pages: 292 words: 62,575

97 Things Every Programmer Should Know by Kevlin Henney

A Pattern Language, active measures, Apollo 11, business intelligence, business logic, commoditize, continuous integration, crowdsourcing, database schema, deliberate practice, domain-specific language, don't repeat yourself, Donald Knuth, fixed income, functional programming, general-purpose programming language, Grace Hopper, index card, inventory management, job satisfaction, level 1 cache, loose coupling, machine readable, Silicon Valley, sorting algorithm, The Wisdom of Crowds

Programmers mediate between the negotiated and uncertain truths of business and the crisp, uncompromising domain of bits and bytes and higher constructed types. With so much to know, so much to do, and so many ways of doing so, no single person or single source can lay claim to "the one true way." Instead, 97 Things Every Programmer Should Know draws on the wisdom of crowds and the voices of experience to offer not so much a coordinated big picture as a crowdsourced mosaic of what every programmer should know. This ranges from code-focused advice to culture, from algorithm usage to agile thinking, from implementation know-how to professionalism, from style to substance.


100 Baggers: Stocks That Return 100-To-1 and How to Find Them by Christopher W Mayer

Alan Greenspan, asset light, bank run, Bear Stearns, Bernie Madoff, book value, business cycle, buy and hold, Carl Icahn, cloud computing, disintermediation, Dissolution of the Soviet Union, dumpster diving, Edward Thorp, Henry Singleton, hindsight bias, housing crisis, index fund, Jeff Bezos, market bubble, Network effects, new economy, oil shock, passive investing, peak oil, Pershing Square Capital Management, shareholder value, Silicon Valley, SimCity, Stanford marshmallow experiment, Steve Jobs, stock buybacks, survivorship bias, Teledyne, The Great Moderation, The Wisdom of Crowds, tontine

It was one of the two questions that, in his own words, “long obsessed” him. The other was whether the stock market was wise in its judgments or merely a “foolish consensus of crowds.” One of his books, Wealth, War and Wisdom, dealt explicitly with these questions through the lens of World War II history, a hobby interest of his. On the wisdom of crowds, Biggs found that the stock markets of the world showed “surprisingly good intuitions at the epic turning points. As the old saying goes, when coming events cast their shadows, they often fall on the NYSE.” He wrote how • “the British stock market bottomed . . . in 1940 just before the Battle of Britain”; • “the US market turned forever in late May 1942 around the epic Battle of Midway”; and • the German market “peaked at the high-water mark of the German attack on Russia just before the advance German patrols actually saw the spires of Moscow in early December 1941.”


pages: 855 words: 178,507

The Information: A History, a Theory, a Flood by James Gleick

Ada Lovelace, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Albert Einstein, AltaVista, bank run, bioinformatics, Bletchley Park, Brownian motion, butterfly effect, Charles Babbage, citation needed, classic study, Claude Shannon: information theory, clockwork universe, computer age, Computing Machinery and Intelligence, conceptual framework, crowdsourcing, death of newspapers, discovery of DNA, Donald Knuth, double helix, Douglas Hofstadter, en.wikipedia.org, Eratosthenes, Fellow of the Royal Society, Gregor Mendel, Gödel, Escher, Bach, Henri Poincaré, Honoré de Balzac, index card, informal economy, information retrieval, invention of the printing press, invention of writing, Isaac Newton, Jacquard loom, Jaron Lanier, jimmy wales, Johannes Kepler, John von Neumann, Joseph-Marie Jacquard, Lewis Mumford, lifelogging, Louis Daguerre, machine translation, Marshall McLuhan, Menlo Park, microbiome, Milgram experiment, Network effects, New Journalism, Norbert Wiener, Norman Macrae, On the Economy of Machinery and Manufactures, PageRank, pattern recognition, phenotype, Pierre-Simon Laplace, pre–internet, quantum cryptography, Ralph Waldo Emerson, RAND corporation, reversible computing, Richard Feynman, Rubik’s Cube, Simon Singh, Socratic dialogue, Stephen Hawking, Steven Pinker, stochastic process, talking drums, the High Line, The Wisdom of Crowds, transcontinental railway, Turing machine, Turing test, women in the workforce, yottabyte

In 2007 this database revealed something that had eluded distinguished critics and listeners: that more than one hundred recordings released by the late English pianist Joyce Hatto—music by Chopin, Beethoven, Mozart, Liszt, and others—were actually stolen performances by other pianists. MIT established a Center for Collective Intelligence, devoted to finding group wisdom and “harnessing” it. It remains difficult to know when and how much to trust the wisdom of crowds—the title of a 2004 book by James Surowiecki, to be distinguished from the madness of crowds as chronicled in 1841 by Charles Mackay, who declared that people “go mad in herds, while they recover their senses slowly, and one by one.”♦ Crowds turn all too quickly into mobs, with their time-honored manifestations: manias, bubbles, lynch mobs, flash mobs, crusades, mass hysteria, herd mentality, goose-stepping, conformity, groupthink—all potentially magnified by network effects and studied under the rubric of information cascades.

Streufert, Siegfried, Peter Suedfeld, and Michael J. Driver. “Conceptual Structure, Information Search, and Information Utilization.” Journal of Personality and Social Psychology 2, no. 5 (1965): 736–40. Sunstein, Cass R. Infotopia: How Many Minds Produce Knowledge. Oxford: Oxford University Press, 2006. Surowiecki, James. The Wisdom of Crowds. New York: Doubleday, 2004. Swade, Doron. “The World Reduced to Number.” Isis 82, no. 3 (1991): 532–36. ———. The Cogwheel Brain: Charles Babbage and the Quest to Build the First Computer. London: Little, Brown, 2000. ———. The Difference Engine: Charles Babbage and the Quest to Build the First Computer.


pages: 606 words: 157,120

To Save Everything, Click Here: The Folly of Technological Solutionism by Evgeny Morozov

"World Economic Forum" Davos, 3D printing, algorithmic bias, algorithmic trading, Amazon Mechanical Turk, An Inconvenient Truth, Andrew Keen, augmented reality, Automated Insights, behavioural economics, Berlin Wall, big data - Walmart - Pop Tarts, Buckminster Fuller, call centre, carbon footprint, Cass Sunstein, choice architecture, citizen journalism, classic study, cloud computing, cognitive bias, creative destruction, crowdsourcing, data acquisition, Dava Sobel, digital divide, disintermediation, Donald Shoup, driverless car, East Village, en.wikipedia.org, Evgeny Morozov, Fall of the Berlin Wall, Filter Bubble, Firefox, Francis Fukuyama: the end of history, frictionless, future of journalism, game design, gamification, Gary Taubes, Google Glasses, Ian Bogost, illegal immigration, income inequality, invention of the printing press, Jane Jacobs, Jean Tirole, Jeff Bezos, jimmy wales, Julian Assange, Kevin Kelly, Kickstarter, license plate recognition, lifelogging, lolcat, lone genius, Louis Pasteur, machine readable, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, moral panic, Narrative Science, Nelson Mandela, Nicholas Carr, packet switching, PageRank, Parag Khanna, Paul Graham, peer-to-peer, Peter Singer: altruism, Peter Thiel, pets.com, placebo effect, pre–internet, public intellectual, Ray Kurzweil, recommendation engine, Richard Thaler, Ronald Coase, Rosa Parks, self-driving car, Sheryl Sandberg, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, Skype, Slavoj Žižek, smart meter, social graph, social web, stakhanovite, Steve Jobs, Steven Levy, Stuxnet, surveillance capitalism, systems thinking, technoutopianism, TED Talk, the built environment, The Chicago School, The Death and Life of Great American Cities, the medium is the message, The Nature of the Firm, the scientific method, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, transaction costs, Twitter Arab Spring, urban decay, urban planning, urban sprawl, Vannevar Bush, warehouse robotics, WikiLeaks, work culture , Yochai Benkler

Being successful at party politics requires a very different set of skills, attitudes, and organizational structures than successfully editing Wikipedia; small and tiny contributions by everyone might be enough to produce a decent article, but they may not be enough to build an effective political party. For all their reliance on the wisdom of crowds, the Pirates have not yet produced any meaningful positions on issues that do not touch upon the purely digital. The Pirates have little to say on matters of social inequality, the European debt crisis, or the future of climate change, not to mention gender inequality, a problem to which their own male-dominated party is a living testament.

Perhaps it wouldn’t be such a bad thing for our newly empowered geeks and engineers to recognize that there are good reasons not to run our politics as a startup; that our politicians face competing demands and that the quest to eradicate lies and hypocrisy may do more harm than good; that there are good reasons to value subjective but high-quality criticism, even if it doesn’t stem from the “wisdom of crowds”; that the dream of flawless communication across nations may not only be unachievable but also undesirable; that humans are complex and occasionally irrational creatures who care about why they do certain things as much as they care about what it is they are doing; that numbers often tell us less than we think and quantification as such might actually thwart reforms.


Alpha Trader by Brent Donnelly

Abraham Wald, algorithmic trading, Asian financial crisis, Atul Gawande, autonomous vehicles, backtesting, barriers to entry, beat the dealer, behavioural economics, bitcoin, Boeing 747, buy low sell high, Checklist Manifesto, commodity trading advisor, coronavirus, correlation does not imply causation, COVID-19, crowdsourcing, cryptocurrency, currency manipulation / currency intervention, currency risk, deep learning, diversification, Edward Thorp, Elliott wave, Elon Musk, endowment effect, eurozone crisis, fail fast, financial engineering, fixed income, Flash crash, full employment, global macro, global pandemic, Gordon Gekko, hedonic treadmill, helicopter parent, high net worth, hindsight bias, implied volatility, impulse control, Inbox Zero, index fund, inflation targeting, information asymmetry, invisible hand, iterative process, junk bonds, Kaizen: continuous improvement, law of one price, loss aversion, low interest rates, margin call, market bubble, market microstructure, Market Wizards by Jack D. Schwager, McMansion, Monty Hall problem, Network effects, nowcasting, PalmPilot, paper trading, pattern recognition, Peter Thiel, prediction markets, price anchoring, price discovery process, price stability, quantitative easing, quantitative trading / quantitative finance, random walk, Reminiscences of a Stock Operator, reserve currency, risk tolerance, Robert Shiller, secular stagnation, Sharpe ratio, short selling, side project, Stanford marshmallow experiment, Stanford prison experiment, survivorship bias, tail risk, TED Talk, the scientific method, The Wisdom of Crowds, theory of mind, time dilation, too big to fail, transaction costs, value at risk, very high income, yield curve, you are the product, zero-sum game

We find broad-based and significant evidence for the anchoring hypothesis; consensus forecasts are biased towards the values of previous months’ data releases, which in some cases results in sizable predictable forecast errors. Trader bias # 9 : Herding One great paradox of markets is that they are mostly driven by the wisdom of the crowd but occasionally by its madness. Separating the two is a key source of alpha. Before we talk about herding and temporary madness in markets, let’s first discuss the wisdom of crowds. Most of the time, the errors made by buyers and sellers cancel out and the average of all the transactions is some approximation of a reasonable equilibrium price. This outcome is similar to the jelly bean experiment. In that experiment, a crowd of people are asked to guess how many jelly beans are in a jar.

This is astounding and suggests you should be humble when trying to beat the market. Instead of a bunch of undergrads guessing how many jelly beans are in the jar, imagine 1,000 highly-trained quants who have millions of dollars to invest in jelly bean estimation technology. Do you think you can beat them? That’s a more apt analogy for the markets. The wisdom of crowds, though, relies on diverse and unbiased opinion. And it relies on incentives. If there is no prize, estimates will be lazy and less accurate. Or (for example) if the jar is extremely far away from the people trying to estimate the number of jelly beans (say at the very front of a huge lecture hall), the crowdsourced conclusion might be too low because the jar looks smaller from afar.


pages: 253 words: 65,834

Mastering the VC Game: A Venture Capital Insider Reveals How to Get From Start-Up to IPO on Your Terms by Jeffrey Bussgang

business cycle, business process, carried interest, deal flow, digital map, discounted cash flows, do well by doing good, hiring and firing, It's morning again in America, Jeff Bezos, Kickstarter, Marc Andreessen, Mark Zuckerberg, Menlo Park, moveable type in China, pattern recognition, Paul Graham, performance metric, Peter Thiel, pets.com, public intellectual, risk tolerance, rolodex, Ronald Reagan, Sand Hill Road, selection bias, shareholder value, Silicon Valley, Skype, software as a service, sovereign wealth fund, Steve Jobs, Steve Jurvetson, technology bubble, The Wisdom of Crowds

The typical start-up that is a good fit for VC money may not generate any revenue for two to four years, if ever. And the typical entrepreneur who is a good fit for VC money wants and needs the very active participation of the capital provider in the oversight of the business. THE PLAYERS A VC firm tends to be organized (often unwittingly) around the thesis of James Surowiecki’s book The Wisdom of Crowds—that is, no one person can be as smart as a group of informed, independent-minded people. And the way to make the best investment decisions is to construct a democratic process rather than a hierarchical one. Thus, VC firms typically gather a group of experienced investment professionals with diverse backgrounds and perspectives and do not allow any one individual’s power or status to sway the discussion.


pages: 221 words: 64,080

Different: Escaping the Competitive Herd by Youngme Moon

AltaVista, Atul Gawande, business cycle, commoditize, creative destruction, hedonic treadmill, Richard Feynman, Saturday Night Live, selection bias, The Wisdom of Crowds, Thorstein Veblen, young professional

But in the past couple of decades, something has turned. There has been a change in the tenor of our conversation around group behavior. Today, our cultural lexicon is replete with references to a newfound optimism in the benefits of self-organizing systems. Col ective intel igence. Smart mobs. The wisdom of crowds. The central conceit in this more recent dialogue is that organic col usion of the sort that arises from intel igent, independent decision making can lead to optimal and even beautiful outcomes. I raise these two countervailing perspectives, not to argue for the validity of one over the other, but because I believe there’s a crux in their reconciliation.


pages: 654 words: 191,864

Thinking, Fast and Slow by Daniel Kahneman

Albert Einstein, Atul Gawande, availability heuristic, Bayesian statistics, behavioural economics, Black Swan, book value, Cass Sunstein, Checklist Manifesto, choice architecture, classic study, cognitive bias, cognitive load, complexity theory, correlation coefficient, correlation does not imply causation, Daniel Kahneman / Amos Tversky, delayed gratification, demand response, endowment effect, experimental economics, experimental subject, Exxon Valdez, feminist movement, framing effect, hedonic treadmill, hindsight bias, index card, information asymmetry, job satisfaction, John Bogle, John von Neumann, Kenneth Arrow, libertarian paternalism, Linda problem, loss aversion, medical residency, mental accounting, meta-analysis, nudge unit, pattern recognition, Paul Samuelson, peak-end rule, precautionary principle, pre–internet, price anchoring, quantitative trading / quantitative finance, random walk, Richard Thaler, risk tolerance, Robert Metcalfe, Ronald Reagan, Shai Danziger, sunk-cost fallacy, Supply of New York City Cabdrivers, systematic bias, TED Talk, The Chicago School, The Wisdom of Crowds, Thomas Bayes, transaction costs, union organizing, Walter Mischel, Yom Kippur War

The procedure I adopted to tame the halo effect conforms to a general principle: decorrelate error! To understand how this principle works, imagine that a large number of observers are shown glass jars containing pennies and are challenged to estimate the number of pennies in each jar. As James Surowiecki explained in his best-selling The Wisdom of Crowds, this is the kind of task in which individuals do very poorly, but pools of individual judgments do remarkably well. Some individuals greatly overestimate the true number, others underestimate it, but when many judgments are averaged, the average tends to be quite accurate. The mechanism is straightforward: all individuals look at the same jar, and all their judgments have a common basis.

Malone, “Unbelieving the Unbelievable: Some Problems in the Rejection of False Information,” Journal of Personality and Social Psychology 59 (1990): 601–13. descriptions of two people: Solomon E. Asch, “Forming {#823. Impressions of Personality,” Journal of Abnormal and Social Psychology 41 (1946): 258–90. all six adjectives: Ibid. Wisdom of Crowds: James Surowiecki, The Wisdom of Crowds (New York: Anchor Books, 2005). one-sided evidence: Lyle A. Brenner, Derek J. Koehler, and Amos Tversky, “On the Evaluation of One-Sided Evidence,” Journal of Behavioral Decision Making 9 (1996): 59–70. 8: How Judgments Happen biological roots: Alexander Todorov, Sean G. Baron, and Nikolaas N.


pages: 252 words: 73,131

The Inner Lives of Markets: How People Shape Them—And They Shape Us by Tim Sullivan

Abraham Wald, Airbnb, airport security, Al Roth, Alvin Roth, Andrei Shleifer, attribution theory, autonomous vehicles, barriers to entry, behavioural economics, Brownian motion, business cycle, buy and hold, centralized clearinghouse, Chuck Templeton: OpenTable:, classic study, clean water, conceptual framework, congestion pricing, constrained optimization, continuous double auction, creative destruction, data science, deferred acceptance, Donald Trump, Dutch auction, Edward Glaeser, experimental subject, first-price auction, framing effect, frictionless, fundamental attribution error, George Akerlof, Goldman Sachs: Vampire Squid, Gunnar Myrdal, helicopter parent, information asymmetry, Internet of things, invisible hand, Isaac Newton, iterative process, Jean Tirole, Jeff Bezos, Johann Wolfgang von Goethe, John Nash: game theory, John von Neumann, Joseph Schumpeter, Kenneth Arrow, late fees, linear programming, Lyft, market clearing, market design, market friction, medical residency, multi-sided market, mutually assured destruction, Nash equilibrium, Occupy movement, opioid epidemic / opioid crisis, Pareto efficiency, Paul Samuelson, Peter Thiel, pets.com, pez dispenser, power law, pre–internet, price mechanism, price stability, prisoner's dilemma, profit motive, proxy bid, RAND corporation, ride hailing / ride sharing, Robert Shiller, Robert Solow, Ronald Coase, school choice, school vouchers, scientific management, sealed-bid auction, second-price auction, second-price sealed-bid, sharing economy, Silicon Valley, spectrum auction, Steve Jobs, Tacoma Narrows Bridge, techno-determinism, technoutopianism, telemarketer, The Market for Lemons, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, transaction costs, two-sided market, uber lyft, uranium enrichment, Vickrey auction, Vilfredo Pareto, WarGames: Global Thermonuclear War, winner-take-all economy

Successful internet platforms, such as eBay, Uber, and Amazon, have similarly figured out ways of making most transactions run smoothly and acting as arbitrator in those that don’t (and, in Uber’s case, using a proprietary algorithm that governs how to connect drivers and customers). The market maker can screen out undesirables from all sides of the platform, but as cases like eBay and Uber suggest, often the job is left to platform participants themselves. The platform manager makes customer feedback possible, and in theory, the wisdom of crowds takes care of the rest, solving the asymmetric information problem that George Akerlof identified as the enemy of market function back in 1970. This has led to all sorts of match-making platforms for goods or services where it was hard to find a reliable provider in the pre–internet era. If Akerlof had wanted to renovate his house in the ’70s, for instance, he would have had to find a Berkeley-area contractor who had the skills for the job, had the time to take it on, was reliable, would quote a fair price, and wouldn’t try to jack up the price once he’d knocked down a few walls.


pages: 251 words: 76,868

How to Run the World: Charting a Course to the Next Renaissance by Parag Khanna

"World Economic Forum" Davos, Albert Einstein, Asian financial crisis, back-to-the-land, bank run, blood diamond, Bob Geldof, borderless world, BRICs, British Empire, call centre, carbon footprint, carbon tax, charter city, clean tech, clean water, cloud computing, commoditize, congestion pricing, continuation of politics by other means, corporate governance, corporate social responsibility, Deng Xiaoping, Doha Development Round, don't be evil, double entry bookkeeping, energy security, European colonialism, export processing zone, facts on the ground, failed state, financial engineering, friendly fire, global village, Global Witness, Google Earth, high net worth, high-speed rail, index fund, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Kickstarter, Kiva Systems, laissez-faire capitalism, Live Aid, Masdar, mass immigration, megacity, Michael Shellenberger, microcredit, military-industrial complex, mutually assured destruction, Naomi Klein, Nelson Mandela, New Urbanism, no-fly zone, off grid, offshore financial centre, oil shock, One Laptop per Child (OLPC), open economy, out of africa, Parag Khanna, private military company, Productivity paradox, race to the bottom, RAND corporation, reserve currency, Salesforce, Silicon Valley, smart grid, South China Sea, sovereign wealth fund, special economic zone, sustainable-tourism, Ted Nordhaus, The Fortune at the Bottom of the Pyramid, The Wisdom of Crowds, too big to fail, trade liberalization, trickle-down economics, UNCLOS, uranium enrichment, Washington Consensus, X Prize

Can Might Make Rights? Building the Rule of Law After Military Interventions. New York: Cambridge University Press, 2006. Sullivan, Nicholas P. You Can Hear Me Now: How Microloans and Cell Phones Are Connecting the World’s Poor to the Global Economy. San Francisco: Jossey-Bass, 2007. Surowiecki, James. The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies, and Nations. New York: Doubleday, 2004. SustainAbility. The 21st Century NGO in the Market for Change. London: SustainAbility, 2005. SustainAbility and the Global Compact. Gearing Up: From Corporate Responsibility to Good Governance and Scalable Solutions.


pages: 296 words: 78,631

Hello World: Being Human in the Age of Algorithms by Hannah Fry

23andMe, 3D printing, Air France Flight 447, Airbnb, airport security, algorithmic bias, algorithmic management, augmented reality, autonomous vehicles, backpropagation, Brixton riot, Cambridge Analytica, chief data officer, computer vision, crowdsourcing, DARPA: Urban Challenge, data science, deep learning, DeepMind, Douglas Hofstadter, driverless car, Elon Musk, fake news, Firefox, Geoffrey Hinton, Google Chrome, Gödel, Escher, Bach, Ignaz Semmelweis: hand washing, John Markoff, Mark Zuckerberg, meta-analysis, Northpointe / Correctional Offender Management Profiling for Alternative Sanctions, pattern recognition, Peter Thiel, RAND corporation, ransomware, recommendation engine, ride hailing / ride sharing, selection bias, self-driving car, Shai Danziger, Silicon Valley, Silicon Valley startup, Snapchat, sparse data, speech recognition, Stanislav Petrov, statistical model, Stephen Hawking, Steven Levy, systematic bias, TED Talk, Tesla Model S, The Wisdom of Crowds, Thomas Bayes, trolley problem, Watson beat the top human players on Jeopardy!, web of trust, William Langewiesche, you are the product

‘Ask the audience’ was typically used in the early rounds of the game, when the questions were a lot easier. None the less, the idea of the collective opinions of a group being more accurate than those of any individual is a well-documented phenomenon. For more on this, see James Surowiecki, The Wisdom of Crowds: Why the Many Are Smarter than the Few (New York: Doubleday, 2004), p. 4. 22. Netflix Technology Blog, https://medium.com/netflix-techblog/netflix-recommendations-beyond-the-5-stars-part-2-d9b96aa399f5. 23. Shih-ho Cheng, ‘Unboxing the random forest classifier: the threshold distributions’, Airbnb Engineering and Data Science, https://medium.com/airbnb-engineering/unboxing-the-random-forest-classifier-the-threshold-distributions-22ea2bb58ea6. 24.


pages: 318 words: 77,223

The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse by Mohamed A. El-Erian

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, balance sheet recession, bank run, barriers to entry, Bear Stearns, behavioural economics, Black Monday: stock market crash in 1987, break the buck, Bretton Woods, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, collapse of Lehman Brothers, corporate governance, currency peg, disruptive innovation, driverless car, Erik Brynjolfsson, eurozone crisis, fear index, financial engineering, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, fixed income, Flash crash, forward guidance, friendly fire, full employment, future of work, geopolitical risk, Hyman Minsky, If something cannot go on forever, it will stop - Herbert Stein's Law, income inequality, inflation targeting, Jeff Bezos, Kenneth Rogoff, Khan Academy, liquidity trap, low interest rates, Martin Wolf, megacity, Mexican peso crisis / tequila crisis, moral hazard, mortgage debt, Norman Mailer, oil shale / tar sands, price stability, principal–agent problem, quantitative easing, risk tolerance, risk-adjusted returns, risk/return, Second Machine Age, secular stagnation, sharing economy, Sheryl Sandberg, sovereign wealth fund, The Great Moderation, The Wisdom of Crowds, too big to fail, University of East Anglia, yield curve, zero-sum game

Fourth, all this makes the argument for passive versus active investment a lot more nuanced and a lot less extreme. It is not an either/or, which much of the discussion in the financial media would have you believe. Rather it is about striking the right balance: using smart passive exposures where investor conviction and foundation do not dominate the wisdom of crowds and where broad-based risk exposure is not undermined by construct defects; but, concurrently, being willing to deviate via high-conviction trades, relative positioning, and risk-management-motivated portfolio overlays. A final point in closing this chapter: The onus on smart communication is central to successfully managing a world in which technological advances engage and empower so many individuals and collectives.


pages: 259 words: 73,193

The End of Absence: Reclaiming What We've Lost in a World of Constant Connection by Michael Harris

4chan, Albert Einstein, algorithmic management, AltaVista, Andrew Keen, augmented reality, Burning Man, Carrington event, cognitive dissonance, crowdsourcing, dematerialisation, disinformation, en.wikipedia.org, Evgeny Morozov, Filter Bubble, Firefox, Google Glasses, informal economy, information retrieval, invention of movable type, invention of the printing press, invisible hand, James Watt: steam engine, Jaron Lanier, jimmy wales, Kevin Kelly, Lewis Mumford, lifelogging, Loebner Prize, low earth orbit, Marshall McLuhan, McMansion, moral panic, Nicholas Carr, off-the-grid, pattern recognition, Plato's cave, pre–internet, Republic of Letters, Silicon Valley, Skype, Snapchat, social web, Steve Jobs, technological solutionism, TED Talk, the medium is the message, The Wisdom of Crowds, traumatic brain injury, Turing test

The brightest moments of human discovery are those unplanned and random instants when you thumb through a strange book in a foreign library or talk auto maintenance with a neuroanatomist. We need our searches to include cross-wiring and dumb accidents, too, not just algorithmic surety. And besides the need for accidental connections, there’s the fact that some things, clearly, are beyond the wisdom of crowds—sometimes speed and volume should bend to make way for theory and meaning. Sometimes we do still need to quiet down the rancor of mass opinion and ask a few select voices to speak up. And doing so in past generations has never been such a problem as it is for us. They never dealt with such a glut of information or such a horde of folk eager to misrepresent it


Designing Search: UX Strategies for Ecommerce Success by Greg Nudelman, Pabini Gabriel-Petit

access to a mobile phone, Albert Einstein, AltaVista, augmented reality, barriers to entry, Benchmark Capital, business intelligence, call centre, cognitive load, crowdsourcing, folksonomy, information retrieval, Internet of things, Neal Stephenson, Palm Treo, performance metric, QR code, recommendation engine, RFID, search costs, search engine result page, semantic web, Silicon Valley, social graph, social web, speech recognition, text mining, the long tail, the map is not the territory, The Wisdom of Crowds, web application, zero-sum game, Zipcar

Figure 14-11: A Social Search Service Diagram (Image credit: Wired, November 2010): http://www.wired.com/magazine/2010/11/st_flowchart_social/. Yet, there’s another class of social search services that makes use of aggregated social data from large networks. I call this “collective social search” since it’s like the wisdom of crowds effect, in that you can see trends from the collective that might be useful in guiding your search. Google Search Suggest is an example of this—it shows you the common search phrases for a given few words. Twitter’s Trending Topics and OneRiot are similar. I think the popularity of this approach is that it’s algorithmic, meaning you can throw more programmers at it and hopefully improve the results.


pages: 245 words: 72,893

How Democracy Ends by David Runciman

barriers to entry, basic income, Bernie Sanders, Big Tech, bitcoin, blockchain, Brexit referendum, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, centre right, crowdsourcing, cuban missile crisis, disinformation, Dominic Cummings, Donald Trump, Dr. Strangelove, Edward Snowden, fake news, first-past-the-post, Francis Fukuyama: the end of history, full employment, Internet of things, Jeremy Corbyn, Jon Ronson, Joseph Schumpeter, Kickstarter, Large Hadron Collider, loss aversion, Mahatma Gandhi, Mark Zuckerberg, money: store of value / unit of account / medium of exchange, mutually assured destruction, Network effects, Nick Bostrom, Norman Mailer, opioid epidemic / opioid crisis, Panopticon Jeremy Bentham, Paris climate accords, Peter Thiel, post-truth, power law, precautionary principle, quantitative easing, Russell Brand, self-driving car, Sheryl Sandberg, Silicon Valley, Steve Bannon, Steven Pinker, the long tail, The Wisdom of Crowds, Travis Kalanick, universal basic income, Yogi Berra

Philosophers from Aristotle onwards have argued that the best way to avoid individual errors of judgement is to pool our opinions so that the weight of numbers can tell. Collective decision-making works better than any individual’s choices if our biases are allowed to cancel each other out. This is the wisdom of crowds. The internet age has seen an enormous revival of interest in this idea. Digital technology now enables the pooling of opinions on a vast scale. Collectively we can rate products, predict futures, solve puzzles and even edit an encyclopedia better than any one of us could do on our own. The internet has also dramatically lowered the barriers to entry.


pages: 261 words: 79,883

Start With Why: How Great Leaders Inspire Everyone to Take Action by Simon Sinek

Apple II, Apple's 1984 Super Bowl advert, Black Swan, business cycle, commoditize, Do you want to sell sugared water for the rest of your life?, hiring and firing, John Markoff, low cost airline, Neil Armstrong, Nick Leeson, Pepsi Challenge, RAND corporation, risk tolerance, Ronald Reagan, shareholder value, Steve Ballmer, Steve Jobs, Steve Wozniak, The Wisdom of Crowds, trade route

., The Monk and the Riddle by Randy Komisar, The Five Dysfunctions of a Team by Patrick Lencioni, Freakanomics by Steven D. Levitt and Stephen J. Dubner, FISH! By Stephen Lundin, Harry Paul, John Christensen and Ken Blanchard, The Naked Brain by Richard Restack, Authentic Happiness by Martin Seligman, The Wisdom of Crowds by James Surowiecki, The Black Swan by Nicholas Taleb, American Mania by Peter Whybrow, M.D., and the single most important book everyone should read, the book that teaches us that we cannot control the circumstances around us, all we can control is our attitude—Man’s Search for Meaning by Viktor Frankel.


pages: 261 words: 72,277

Invisible Influence: The Hidden Forces that Shape Behavior by Jonah Berger

Apollo 11, assortative mating, barriers to entry, cotton gin, cuban missile crisis, desegregation, double helix, driverless car, fixed-gear, flying shuttle, Google Glasses, job satisfaction, messenger bag, meta-analysis, mirror neurons, PalmPilot, Ronald Reagan, six sigma, spinning jenny, The Wisdom of Crowds, twin studies, white flight, Yogi Berra

Group members who were on the fence tend to conform, and unless someone has strong objections, they tend to keep their opposition to themselves. Without much of a peep, the group quietly goes one way when they could have just as easily gone the opposite. Groupthink has been blamed for everything from the space shuttle Challenger disaster to the Cuban missile crisis. People talk about the wisdom of crowds, but crowds are only wise when the group has access to everyone’s individual information. Aggregating these pieces can lead to better decisions than any person could have made alone. But if everyone just follows everyone else, or keeps their information to themselves, the value of the group is lost.


pages: 342 words: 72,927

Transport for Humans: Are We Nearly There Yet? by Pete Dyson, Rory Sutherland

Abraham Maslow, Alan Greenspan, autonomous vehicles, barriers to entry, behavioural economics, bitcoin, Black Swan, Boeing 747, BRICs, butterfly effect, car-free, carbon footprint, Charles Babbage, choice architecture, cognitive bias, cognitive load, coronavirus, COVID-19, Crossrail, Daniel Kahneman / Amos Tversky, decarbonisation, demand response, Diane Coyle, digital map, driverless car, Dunning–Kruger effect, Elon Musk, fake news, functional fixedness, gender pay gap, George Akerlof, gig economy, global supply chain, Goodhart's law, Greta Thunberg, Gödel, Escher, Bach, high-speed rail, hive mind, Hyperloop, Induced demand, informal economy, Isaac Newton, Jane Jacobs, lockdown, longitudinal study, loss aversion, low cost airline, Lyft, megaproject, meta-analysis, Network effects, nudge unit, Ocado, overview effect, Paul Samuelson, performance metric, pneumatic tube, RAND corporation, randomized controlled trial, remote working, ride hailing / ride sharing, risk tolerance, Rory Sutherland, Sapir-Whorf hypothesis, selection bias, Skype, smart transportation, social distancing, South Sea Bubble, systems thinking, TED Talk, the map is not the territory, The Market for Lemons, the scientific method, The Wisdom of Crowds, Thomas Malthus, Uber and Lyft, uber lyft, urban planning, Veblen good, When a measure becomes a target, yield management, zero-sum game

Group dynamics Committees control decision making out of necessity. Transport involves tasks and projects that are far too large to be completed by one person, so people must come together, typically with a range of skills, objectives and levels of seniority in a hierarchy. We often assume that groups universally outperform individuals: the wisdom of crowds, the hive mind, many brains are better than one. And this can be the case when the way that people decide follows structured diversity of thought and perspectives. For example, in a 2018 study, groups were found to outperform individuals on a controlled task that required them to match ­climate-change policies against climate scenarios of varying severities.19 Despite prompting, 80% of individuals failed to produce alternative arguments, whereas groups generated more self-reflection on the impacts of emissions growth.


pages: 720 words: 197,129

The Innovators: How a Group of Inventors, Hackers, Geniuses and Geeks Created the Digital Revolution by Walter Isaacson

1960s counterculture, Ada Lovelace, AI winter, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Albert Einstein, AltaVista, Alvin Toffler, Apollo Guidance Computer, Apple II, augmented reality, back-to-the-land, beat the dealer, Bill Atkinson, Bill Gates: Altair 8800, bitcoin, Bletchley Park, Bob Noyce, Buckminster Fuller, Byte Shop, c2.com, call centre, Charles Babbage, citizen journalism, Claude Shannon: information theory, Clayton Christensen, commoditize, commons-based peer production, computer age, Computing Machinery and Intelligence, content marketing, crowdsourcing, cryptocurrency, Debian, desegregation, Donald Davies, Douglas Engelbart, Douglas Engelbart, Douglas Hofstadter, driverless car, Dynabook, El Camino Real, Electric Kool-Aid Acid Test, en.wikipedia.org, eternal september, Evgeny Morozov, Fairchild Semiconductor, financial engineering, Firefox, Free Software Foundation, Gary Kildall, Google Glasses, Grace Hopper, Gödel, Escher, Bach, Hacker Ethic, Haight Ashbury, Hans Moravec, Howard Rheingold, Hush-A-Phone, HyperCard, hypertext link, index card, Internet Archive, Ivan Sutherland, Jacquard loom, Jaron Lanier, Jeff Bezos, jimmy wales, John Markoff, John von Neumann, Joseph-Marie Jacquard, Leonard Kleinrock, Lewis Mumford, linear model of innovation, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, Menlo Park, Mitch Kapor, Mother of all demos, Neil Armstrong, new economy, New Journalism, Norbert Wiener, Norman Macrae, packet switching, PageRank, Paul Terrell, pirate software, popular electronics, pre–internet, Project Xanadu, punch-card reader, RAND corporation, Ray Kurzweil, reality distortion field, RFC: Request For Comment, Richard Feynman, Richard Stallman, Robert Metcalfe, Rubik’s Cube, Sand Hill Road, Saturday Night Live, self-driving car, Silicon Valley, Silicon Valley startup, Skype, slashdot, speech recognition, Steve Ballmer, Steve Crocker, Steve Jobs, Steve Wozniak, Steven Levy, Steven Pinker, Stewart Brand, Susan Wojcicki, technological singularity, technoutopianism, Ted Nelson, Teledyne, the Cathedral and the Bazaar, The Coming Technological Singularity, The Nature of the Firm, The Wisdom of Crowds, Turing complete, Turing machine, Turing test, value engineering, Vannevar Bush, Vernor Vinge, Von Neumann architecture, Watson beat the top human players on Jeopardy!, Whole Earth Catalog, Whole Earth Review, wikimedia commons, William Shockley: the traitorous eight, Yochai Benkler

But tenacious Albanian partisans kept reinserting the claim. The Einstein-in-Albania tug-of-war lasted weeks. I became worried that the obstinacy of a few passionate advocates could undermine Wikipedia’s reliance on the wisdom of crowds. But after a while, the edit wars ended, and the article no longer had Einstein going to Albania. At first I didn’t credit that success to the wisdom of crowds, since the push for a fix had come from me and not from the crowd. Then I realized that I, like thousands of others, was in fact a part of the crowd, occasionally adding a tiny bit to its wisdom. A key principle of Wikipedia was that articles should have a neutral point of view.


pages: 398 words: 86,023

The Wikipedia Revolution: How a Bunch of Nobodies Created the World's Greatest Encyclopedia by Andrew Lih

Albert Einstein, AltaVista, barriers to entry, Benjamin Mako Hill, Bill Atkinson, c2.com, Cass Sunstein, citation needed, commons-based peer production, crowdsourcing, Debian, disinformation, en.wikipedia.org, Firefox, Ford Model T, Free Software Foundation, Hacker Ethic, HyperCard, index card, Jane Jacobs, Jason Scott: textfiles.com, jimmy wales, Ken Thompson, Kickstarter, Marshall McLuhan, Mitch Kapor, Network effects, optical character recognition, Ralph Waldo Emerson, Richard Stallman, side project, Silicon Valley, Skype, slashdot, social software, Steve Jobs, the Cathedral and the Bazaar, The Death and Life of Great American Cities, the long tail, The Wisdom of Crowds, Tragedy of the Commons, urban planning, urban renewal, Vannevar Bush, wikimedia commons, Y2K, Yochai Benkler

Credentials and central control, once considered the most important parameters for generating quality content, now yield to new terms: crowdsourcing, peer production, and open source intelligence. What was once only done top-down is now being viewed bottom-up. Books and essays have addressed the impact of projects freely driven by communities of scattered individuals: The Cathedral and the Bazaar by Eric S. Raymond, The Wisdom of Crowds by James Surowiecki, The Wealth of Networks by Yochai Benkler, The Long Tail by Chris Anderson, Infotopia by Cass R. Sun-stein, and Everything Is Miscellaneous by David Weinberger. This book, however, goes in with a deeper focus on Wikipedia, explaining how it evolved to become the phenomenon it is today, and showing the fascinating community behind the articles and the unique online culture the site has fostered.


pages: 290 words: 82,871

The Hidden Half: How the World Conceals Its Secrets by Michael Blastland

air freight, Alfred Russel Wallace, banking crisis, Bayesian statistics, behavioural economics, Berlin Wall, Brexit referendum, central bank independence, cognitive bias, complexity theory, Deng Xiaoping, Diane Coyle, Donald Trump, epigenetics, experimental subject, full employment, George Santayana, hindsight bias, income inequality, Jeremy Corbyn, manufacturing employment, mass incarceration, meta-analysis, minimum wage unemployment, nudge unit, oil shock, p-value, personalized medicine, phenotype, Ralph Waldo Emerson, random walk, randomized controlled trial, replication crisis, Richard Thaler, selection bias, the map is not the territory, the scientific method, The Wisdom of Crowds, twin studies

Even worse, these theories – although often interesting and plausible when considered individually – are fundamentally incoherent when viewed collectively.’ Like the aphorisms we came across earlier that point both ways – ‘look before you leap, but he who hesitates is lost’ – theory often does the same. At a popular level, there’s the wisdom of crowds, and the madness of crowds (or groupthink); the value of impulsive judgement (Blink), and the dangers of impulsive judgement (Kahneman’s ‘system 1’ thinking). In its defence, social science is more than a manual. Duncan Watts says it helps us ‘to challenge common-sense assumptions about the nature of social reality, provide rich descriptions of lived experience, inspire new ways of thinking about human behaviour and shed light on specific empirical puzzles – that do not directly address practical problems but can still provide valuable insight’.


pages: 270 words: 79,992

The End of Big: How the Internet Makes David the New Goliath by Nicco Mele

4chan, A Declaration of the Independence of Cyberspace, Airbnb, Amazon Web Services, Andy Carvin, Any sufficiently advanced technology is indistinguishable from magic, Apple's 1984 Super Bowl advert, barriers to entry, Berlin Wall, big-box store, bitcoin, bread and circuses, business climate, call centre, Cass Sunstein, centralized clearinghouse, Chelsea Manning, citizen journalism, cloud computing, collaborative consumption, collaborative editing, commoditize, Computer Lib, creative destruction, crony capitalism, cross-subsidies, crowdsourcing, David Brooks, death of newspapers, disruptive innovation, Donald Trump, Douglas Engelbart, Douglas Engelbart, en.wikipedia.org, Evgeny Morozov, Exxon Valdez, Fall of the Berlin Wall, Filter Bubble, Firefox, global supply chain, Google Chrome, Gordon Gekko, Hacker Ethic, Ian Bogost, Jaron Lanier, Jeff Bezos, jimmy wales, John Markoff, John Perry Barlow, Julian Assange, Kevin Kelly, Khan Academy, Kickstarter, Lean Startup, lolcat, machine readable, Mark Zuckerberg, military-industrial complex, minimum viable product, Mitch Kapor, Mohammed Bouazizi, Mother of all demos, Narrative Science, new economy, Occupy movement, off-the-grid, old-boy network, One Laptop per Child (OLPC), peer-to-peer, period drama, Peter Thiel, pirate software, public intellectual, publication bias, Robert Metcalfe, Ronald Reagan, Ronald Reagan: Tear down this wall, satellite internet, Seymour Hersh, sharing economy, Silicon Valley, Skype, social web, Steve Jobs, Steve Wozniak, Stewart Brand, Stuxnet, Ted Nelson, Ted Sorensen, Telecommunications Act of 1996, telemarketer, the Cathedral and the Bazaar, the long tail, The Wisdom of Crowds, transaction costs, uranium enrichment, Whole Earth Catalog, WikiLeaks, Zipcar

I loved politics but found the role of money distasteful. It felt like a complete subversion of the Founding Fathers’ notions of government of, by, and for the people. At the same time, I was becoming steeped in open-source programming and a range of heady ideas—crowd sourcing, distributed network power, the wisdom of crowds—embraced by the nerd godfathers discussed in chapter 1. Leaving Washington to pursue a nonpolitical job in New York, I immersed myself in the growing world of grassroots political blogs, which reminded me of the online communities I had encountered in high school. After September 11, 2001, becoming concerned by the growing momentum toward war in Iraq, I began to spend more and more time surfing the emerging political blogosphere, lurking on sites like MyDD.com.


pages: 261 words: 86,905

How to Speak Money: What the Money People Say--And What It Really Means by John Lanchester

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, asset allocation, Basel III, behavioural economics, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, blood diamond, Bretton Woods, BRICs, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collective bargaining, commoditize, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Dava Sobel, David Graeber, disintermediation, double entry bookkeeping, en.wikipedia.org, estate planning, fear index, financial engineering, financial innovation, Flash crash, forward guidance, Garrett Hardin, Gini coefficient, Glass-Steagall Act, global reserve currency, high net worth, High speed trading, hindsight bias, hype cycle, income inequality, inflation targeting, interest rate swap, inverted yield curve, Isaac Newton, Jaron Lanier, John Perry Barlow, joint-stock company, joint-stock limited liability company, junk bonds, Kodak vs Instagram, Kondratiev cycle, Large Hadron Collider, liquidity trap, London Interbank Offered Rate, London Whale, loss aversion, low interest rates, margin call, McJob, means of production, microcredit, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, negative equity, neoliberal agenda, New Urbanism, Nick Leeson, Nikolai Kondratiev, Nixon shock, Nixon triggered the end of the Bretton Woods system, Northern Rock, offshore financial centre, oil shock, open economy, paradox of thrift, plutocrats, Ponzi scheme, precautionary principle, proprietary trading, purchasing power parity, pushing on a string, quantitative easing, random walk, rent-seeking, reserve currency, Richard Feynman, Right to Buy, road to serfdom, Ronald Reagan, Satoshi Nakamoto, security theater, shareholder value, Silicon Valley, six sigma, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, Steve Jobs, survivorship bias, The Chicago School, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tragedy of the Commons, trickle-down economics, two and twenty, Two Sigma, Tyler Cowen, Washington Consensus, wealth creators, working poor, yield curve

Market Markets are frequently spoken of as if they have thoughts and feelings and intentions, and this puzzles outsiders: I’ve often been asked what on earth it means when commentators say, “The market thinks that . . .” The answer is that markets aggregate a whole range of widely divergent views and end up in effect expressing a single aggregate opinion. This process is discussed fascinatingly and at length in James Surowiecki’s brilliant book The Wisdom of Crowds. It’s often an aid to clarity to regard the market as an individual, expressing an individual view: “The market hates sterling today,” for instance, even though many of the people taking part in that market in fact think the exact opposite. It is crucial to remember that this individual, dubbed Mr.


pages: 266 words: 86,324

The Drunkard's Walk: How Randomness Rules Our Lives by Leonard Mlodinow

Albert Einstein, Alfred Russel Wallace, Antoine Gombaud: Chevalier de Méré, Atul Gawande, behavioural economics, Brownian motion, butterfly effect, correlation coefficient, Daniel Kahneman / Amos Tversky, data science, Donald Trump, feminist movement, forensic accounting, Gary Kildall, Gerolamo Cardano, Henri Poincaré, index fund, Isaac Newton, law of one price, Monty Hall problem, pattern recognition, Paul Erdős, Pepto Bismol, probability theory / Blaise Pascal / Pierre de Fermat, RAND corporation, random walk, Richard Feynman, Ronald Reagan, Stephen Hawking, Steve Jobs, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Bayes, V2 rocket, Watson beat the top human players on Jeopardy!

Gamson and Norman A. Scotch, “Scapegoating in Baseball,” American Journal of Sociology 70, no. 1 (July 1964): 69–72; on soccer, Ruud H. Koning, “An Econometric Evaluation of the Effect of Firing a Coach on Team Performance,” Applied Economics 35, no. 5 (March 2003): 555–64. 3. James Surowiecki, The Wisdom of Crowds (New York: Doubleday, 2004), pp. 218–19. 4. Armen Alchian, “Uncertainty, Evolution, and Economic Theory,” Journal of Political Economy 58, no. 3 (June 1950): 213. Chapter 1: Peering through the Eyepiece of Randomness 1. Kerstin Preuschoff, Peter Bossaerts, and Steven R. Quartz, “Neural Differentiation of Expected Reward and Risk in Human Subcortical Structures,” Neuron 51 (August 3, 2006): 381–90. 2.


pages: 249 words: 81,217

The Art of Rest: How to Find Respite in the Modern Age by Claudia Hammond

Abraham Maslow, Anton Chekhov, conceptual framework, correlation does not imply causation, Desert Island Discs, Donald Trump, El Camino Real, iterative process, Kickstarter, lifelogging, longitudinal study, Menlo Park, meta-analysis, Milgram experiment, moral panic, overview effect, Stephen Hawking, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wisdom of Crowds, theory of mind, Thorstein Veblen

And the more you know about how important restful activities are, I find, the easier it is to do them deliberately and without guilt. Like the music charts, the Rest Test top ten is counted down in reverse order, starting with the tenth most popular restful activity, and ending with number one. I’m happy to tell you from the outset that the most popular activity turned out to be reading. You know what they say about the wisdom of crowds: 18,000 people can’t be wrong. Enjoy the book, things don’t get any more restful than reading, it seems, and what could be more restful than reading a book about rest? 10 MINDFULNESS Question: What is a mindfulness teacher’s favourite food? Answer: Raisins This is not a joke, as you’ve probably noticed.


pages: 280 words: 82,393

Conflicted: How Productive Disagreements Lead to Better Outcomes by Ian Leslie

Atul Gawande, Ben Horowitz, Berlin Wall, Black Lives Matter, call centre, data science, different worldview, double helix, Fall of the Berlin Wall, Isaac Newton, longitudinal study, low cost airline, Mark Zuckerberg, medical malpractice, meta-analysis, Nelson Mandela, Paul Graham, Silicon Valley, Socratic dialogue, the scientific method, The Wisdom of Crowds, work culture , zero-sum game

Harvey (eds), Attribution, Communication Behavior, and Close Relationships, Cambridge University Press, 2001 Sloman, Steven, and Fernbach, Philip, The Knowledge Illusion: the myth of individual thought and the power of collective wisdom, Pan, 2018 Smith, Dana, interview with James Evans: ‘The Wisdom of Crowds Requires the Political Left and Right to Work Together’, Scientific American, 8 March 2019 Sobo, Elisa, ‘Theorising (Vaccine) Refusal: Through the Looking Glass’, Cultural Anthropology, 31 (3), 2016 Stokoe, Elizabeth, Talk: The Science of Conversation, Little Brown, 2018 Sun, Katherine Q., and Slepian, Michael L., ‘The conversations we seek to avoid’, Organizational Behaviour and Human Decision Processes, 60, September 2020 Talhelm, Thomas, et al., ‘Liberals Think More Analytically (More “WEIRD”) Than Conservatives’, Personality and Social Psychology Bulletin, 41 (2), 24 December 2014 Tan, Chenhao, et al., ‘Winning Arguments: Interaction Dynamics and Persuasion Strategies in Good-faith Online Discussions’, Proceedings of the 25th International World Wide Web Conference, 2016) Tesser, Abraham, et al., ‘Conflict: the role of calm and angry parent–child discussion in adolescent adjustment’, Journal of Social and Clinical Psychology, 8 (3), 1989 Thibodeau, David, and Whiteson, Leon, A Place Called Waco, PublicAffairs, 1999 Thompson, George, Verbal Judo: The Gentle Art of Persuasion, HarperCollins USA, 2014 Tiedens, Larissa Z., ‘Anger and Advancement versus Sadness and Subjugation: The Effect of Negative Emotion Expressions on Social Status Conferral’, Journal of Personality and Social Psychology, 80 (1), 2001 Trevors, Gregory, et al., ‘Identity and Epistemic Emotions During Knowledge Revision: A Potential Account for the Backfire Effect’, Discourse Processes, 53 (5), January 2016 Wallace, David Foster, ‘Tense Present: Democracy, English, and the Wars over Usage’, in Consider the Lobster and Other Essays, Little Brown 2006 Wasserman, Noam, The Founder’s Dilemmas, Princeton University Press, 2013 Watters, Ethan, ‘We Aren’t the World’, Pacific Standard, 25 February 2013 Wender, Jonathan, Policing and the Poetics of Everyday Life, University of Illinois Press, 2009 West, Richard F., et al., ‘Cognitive Sophistication Does Not Attenuate the Bias Blind Spot’, Journal of Personality and Social Psychology, 103 (3), 2012 Whipps, Judy D., ‘A Pragmatist Reading of Mary Parker Follett’s Integrative Process’, Faculty Peer Reviewed Articles, 8, 2014, https://scholarworks.gvso.edu/lib-articles/8 Witkowski, Sadie, ‘Psychology Researchers Explore How Vaccine Beliefs Are Formed’, Voice of America News, 16 August 2018 Wolf Shenk, Joshua, Powers of Two: Finding the Essence of Innovation in Creative Pairs, John Murray, 2014 Zanes, Warren, Petty: The Biography, Macmillan USA, 2015 Zartman, I.


pages: 327 words: 91,351

Traders at Work: How the World's Most Successful Traders Make Their Living in the Markets by Tim Bourquin, Nicholas Mango

algorithmic trading, automated trading system, backtesting, buy and hold, commodity trading advisor, Credit Default Swap, Elliott wave, financial engineering, fixed income, global macro, Long Term Capital Management, managed futures, Market Wizards by Jack D. Schwager, paper trading, pattern recognition, prediction markets, risk tolerance, Small Order Execution System, statistical arbitrage, The Wisdom of Crowds, transaction costs, zero-sum game

But many of the wealthy traders I talked with realized early on in their trading careers that the markets are driven by human greed, fear, and panic—the same emotions that drive rioters to overturn cars and break store windows. There are several excellent trading books that aren’t actually about trading at all but nevertheless will give you insight into what drives human behavior in a variety of situations. One my favorites is The Wisdom of Crowds, by James Surowiecki (Doubleday, 2004). Another is The Art of Strategy, by Avinash Dixit and Barry Nalebuff (W. W. Norton & Company, 2008). And finally, a third book I recommend is Markets, Mobs, and Mayhem, by Robert Menschel (Wiley, 2002). Books that address the basic premises of human nature will give you a new perspective on how supply and demand in any market move prices—and price is king.


pages: 422 words: 89,770

Death of the Liberal Class by Chris Hedges

1960s counterculture, Alan Greenspan, Albert Einstein, Berlin Wall, call centre, clean water, collective bargaining, Columbine, corporate governance, deindustrialization, desegregation, disinformation, Donald Trump, Fall of the Berlin Wall, food desert, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, hive mind, housing crisis, Howard Zinn, Ida Tarbell, illegal immigration, independent contractor, Jane Jacobs, Jaron Lanier, Lao Tzu, Lewis Mumford, military-industrial complex, Murray Bookchin, Pearl River Delta, Plato's cave, post scarcity, power law, profit motive, public intellectual, Ralph Nader, Ronald Reagan, strikebreaker, the long tail, the scientific method, The Wisdom of Crowds, Tobin tax, union organizing, Unsafe at Any Speed, Upton Sinclair, W. E. B. Du Bois, WikiLeaks, working poor, Works Progress Administration

“There are some things crowds can do, such as count the jelly beans in the jar or guess the weight of the ox,” Lanier said:I acknowledge this phenomenon is real. But I propose that the line between when crowds can think effectively as a crowd and when they can’t is a little different. If you read [James] Surowiecki’s The Wisdom of Crowds, he, as well as other theorists, say that if you want a crowd to be wise, the key is to reduce the communication flow between the members so they do not influence each other, so they are truly independent and have separate sample points. It brings up an interesting paradox. The starting point for online crowd enthusiasts is that connection is good and everyone should be connected.


pages: 345 words: 92,063

Power, for All: How It Really Works and Why It's Everyone's Business by Julie Battilana, Tiziana Casciaro

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Abraham Maslow, affirmative action, agricultural Revolution, Albert Einstein, algorithmic bias, Andy Rubin, Asperger Syndrome, benefit corporation, Big Tech, BIPOC, Black Lives Matter, blood diamond, Boris Johnson, British Empire, call centre, Cass Sunstein, classic study, clean water, cognitive dissonance, collective bargaining, conceptual framework, coronavirus, COVID-19, CRISPR, deep learning, different worldview, digital rights, disinformation, Elon Musk, Erik Brynjolfsson, fake news, feminist movement, fundamental attribution error, future of work, George Floyd, gig economy, Greta Thunberg, hiring and firing, impact investing, income inequality, informal economy, Intergovernmental Panel on Climate Change (IPCC), invention of movable type, Jeff Bezos, job satisfaction, Joshua Gans and Andrew Leigh, Mahatma Gandhi, means of production, mega-rich, meritocracy, meta-analysis, Milgram experiment, moral hazard, Naomi Klein, Nelson Mandela, Occupy movement, Panopticon Jeremy Bentham, principal–agent problem, profit maximization, Ralph Waldo Emerson, ride hailing / ride sharing, Salesforce, School Strike for Climate, Second Machine Age, shareholder value, sharing economy, Sheryl Sandberg, Shoshana Zuboff, Silicon Valley, social distancing, Social Justice Warrior, Social Responsibility of Business Is to Increase Its Profits, Steven Pinker, surveillance capitalism, tacit knowledge, tech worker, the scientific method, The Wisdom of Crowds, TikTok, Tim Cook: Apple, transatlantic slave trade, union organizing, zero-sum game

Subsequent models also see personal and moral development as progressing in stages of increasing mental complexity, most prominently the developmental psychology of Robert Kegan (see Robert Kegan, The Evolving Self: Problem and Process in Human Development [Cambridge, MA: Harvard University Press, 1982]). 85 Lars Skov Henriksen, Kristin Strømsnes, and Lars Svedberg, eds., Civic Engagement in Scandinavia: Volunteering, Informal Help and Giving in Denmark, Norway and Sweden (Cham, Switzerland: Springer, 2018). 86 Elizabeth Anderson, “The Epistemology of Democracy,” Episteme 3, no. 1–2 (2006): 8–22. 87 James Surowiecki, The Wisdom of Crowds (New York: Anchor Books, 2005); Hélène Landemore, Democratic Reason: Politics, Collective Intelligence, and the Rule of the Many (Princeton, NJ: Princeton University Press, 2017). 88 Jean-Jacques Rousseau, Du contrat social ou Principes du droit politique (Paris: P. Pourrat Frères, 1839), 93.


How to Stand Up to a Dictator by Maria Ressa

2021 United States Capitol attack, activist lawyer, affirmative action, Affordable Care Act / Obamacare, airport security, anti-communist, Asian financial crisis, Big Tech, Brexit referendum, business process, business process outsourcing, call centre, Cambridge Analytica, citizen journalism, cognitive bias, colonial rule, commoditize, contact tracing, coronavirus, COVID-19, crowdsourcing, delayed gratification, disinformation, Donald Trump, fake news, future of journalism, iterative process, James Bridle, Kevin Roose, lockdown, lone genius, Mahatma Gandhi, Mark Zuckerberg, Marshall McLuhan, Menlo Park, Milgram experiment, move fast and break things, natural language processing, Nelson Mandela, Network effects, obamacare, performance metric, QAnon, recommendation engine, Sheryl Sandberg, Shoshana Zuboff, Silicon Valley, Steven Levy, surveillance capitalism, the medium is the message, The Wisdom of Crowds, TikTok, Twitter Arab Spring, work culture

,” South China Morning Post, April 28, 2020, https://www.scmp.com/week-asia/politics/article/3081939/coronavirus-covid-19-task-force-dutertes-rolex-12-plan-marcos. 7.Korina Sanchez, Henry Omaga-Diaz, and Ces Oreña-Drilon were the founding anchors of Bandila. 8.We co-opted two key ideas: crowdsourcing from James Surowiecki, who wrote the book The Wisdom of Crowds, and the tipping point from the book The Tipping Point, written more than a decade earlier by Malcolm Gladwell. 9.“Ako ang Simula,” YouTube, October 20, 2009, https://www.youtube.com/watch?v=Kbm1HfW9HYs. 10.Joseph Campbell was right about the power of myth, and we thought about universal truths that would resonate for the Philippines. 11.Video call to action available here: bravenewworldressa, “Boto Mo, iPatrol Mo Maria Ressa Stand Up and Say AKO ANG SIMULA!


pages: 788 words: 223,004

Merchants of Truth: The Business of News and the Fight for Facts by Jill Abramson

"World Economic Forum" Davos, 23andMe, 4chan, Affordable Care Act / Obamacare, Alexander Shulgin, Apple's 1984 Super Bowl advert, barriers to entry, Bernie Madoff, Bernie Sanders, Big Tech, Black Lives Matter, Cambridge Analytica, Charles Lindbergh, Charlie Hebdo massacre, Chelsea Manning, citizen journalism, cloud computing, commoditize, content marketing, corporate governance, creative destruction, crowdsourcing, data science, death of newspapers, digital twin, diversified portfolio, Donald Trump, East Village, Edward Snowden, fake news, Ferguson, Missouri, Filter Bubble, future of journalism, glass ceiling, Google Glasses, haute couture, hive mind, income inequality, information asymmetry, invisible hand, Jeff Bezos, Joseph Schumpeter, Khyber Pass, late capitalism, Laura Poitras, Marc Andreessen, Mark Zuckerberg, move fast and break things, Nate Silver, new economy, obamacare, Occupy movement, Paris climate accords, performance metric, Peter Thiel, phenotype, pre–internet, race to the bottom, recommendation engine, Robert Mercer, Ronald Reagan, Saturday Night Live, self-driving car, sentiment analysis, Sheryl Sandberg, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, skunkworks, Snapchat, social contagion, social intelligence, social web, SoftBank, Steve Bannon, Steve Jobs, Steven Levy, tech billionaire, technoutopianism, telemarketer, the scientific method, The Wisdom of Crowds, Tim Cook: Apple, too big to fail, vertical integration, WeWork, WikiLeaks, work culture , Yochai Benkler, you are the product

Their headlines were hyped, although recently their desire to be serious news providers had improved quality. BuzzFeed and Vice depended on social media sharing, a broad metric called “engagement,” which included time spent reading, the number of likes, shares, and comments on social media, and a host of other factors. The wisdom of crowds, with commenters rather than professional journalists setting the terms, drove coverage. The breathless news cycle left little time for formal training of the young, aspiring journalists who mostly sat behind computers scraping previously published content off the internet and rewriting it or spinning it in new directions.

In 2014 the ad industry’s bible, Ad Age, detailed Facebook’s strategy for taking on its main rival. Zuckerberg’s first move was mimicry. A popular feature on both BuzzFeed and YouTube was showing how many views a particular video had enjoyed. Viewers liked to watch stories that had high traffic, assuming popular tastes revealed the wisdom of crowds. So Facebook announced that it too would include data on numbers of views for each video. It also gave preference to videos displayed on its own digital player and made it cumbersome to watch YouTube videos on Facebook. YouTube had already established profitable partnerships with content-makers like Vice, giving them a cut of ad revenue.


pages: 410 words: 101,260

Originals: How Non-Conformists Move the World by Adam Grant

"World Economic Forum" Davos, Abraham Maslow, Albert Einstein, Apple's 1984 Super Bowl advert, availability heuristic, barriers to entry, behavioural economics, Bluma Zeigarnik, business process, business process outsourcing, Cass Sunstein, classic study, clean water, cognitive dissonance, creative destruction, cuban missile crisis, Daniel Kahneman / Amos Tversky, Dean Kamen, double helix, Elon Musk, emotional labour, fear of failure, Firefox, George Santayana, Ignaz Semmelweis: hand washing, information security, Jeff Bezos, Jeff Hawkins, job satisfaction, job-hopping, Joseph Schumpeter, Kevin Roose, Kickstarter, Lean Startup, Louis Pasteur, Mahatma Gandhi, Mark Zuckerberg, meta-analysis, minimum viable product, Neil Armstrong, Nelson Mandela, Network effects, off-the-grid, PalmPilot, pattern recognition, Paul Graham, Peter Thiel, Ralph Waldo Emerson, random walk, risk tolerance, Rosa Parks, Saturday Night Live, Sheryl Sandberg, Silicon Valley, Skype, Steve Jobs, Steve Wozniak, Steven Pinker, TED Talk, The Wisdom of Crowds, women in the workforce

When artists assessed one another’s performances, they were about twice as accurate as managers and test audiences in predicting how often the videos would be shared. Compared to creators, managers and test audiences were 56 percent and 55 percent more prone to major false negatives, undervaluing a strong, novel performance by five ranks or more in the set of ten they viewed. We often speak of the wisdom of crowds, but we need to be careful about which crowds we’re considering. On average, the combined forecasts of all 120 circus managers were no better than a typical single creator’s predictions. Managers and test audiences tended to fixate on a particular category of favored acts and reject the rest.


pages: 268 words: 109,447

The Cultural Logic of Computation by David Golumbia

Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, American ideology, Benoit Mandelbrot, Bletchley Park, borderless world, business process, cellular automata, citizen journalism, Claude Shannon: information theory, computer age, Computing Machinery and Intelligence, corporate governance, creative destruction, digital capitalism, digital divide, en.wikipedia.org, finite state, folksonomy, future of work, Google Earth, Howard Zinn, IBM and the Holocaust, iterative process, Jaron Lanier, jimmy wales, John von Neumann, Joseph Schumpeter, late capitalism, Lewis Mumford, machine readable, machine translation, means of production, natural language processing, Norbert Wiener, One Laptop per Child (OLPC), packet switching, RAND corporation, Ray Kurzweil, RFID, Richard Stallman, semantic web, Shoshana Zuboff, Slavoj Žižek, social web, stem cell, Stephen Hawking, Steve Ballmer, Stewart Brand, strong AI, supply-chain management, supply-chain management software, technological determinism, Ted Nelson, telemarketer, The Wisdom of Crowds, theory of mind, Turing machine, Turing test, Vannevar Bush, web application, Yochai Benkler

New York: Cambridge University Press. Sullivan, Laurie. 2004. “Wal-Mart’s Way: Heavyweight Retailer Looks Inward to Stay Innovative in Business Technology.” Information Week (September 27). http://www.informationweek.com. Sunstein, Cass R. 2001. Republic.com. Princeton, NJ: Princeton University Press. Surowiecki, James. 2005. The Wisdom of Crowds. New York: Anchor Books. Swartz, Mimi, with Sherron Watkins. 2003. Power Failure: The Inside Story of the Collapse of Enron. New York: Doubleday. Sweezy, Paul M. 1972. Modern Capitalism and Other Essays. New York: Monthly Review Press. Tanselle, G. Thomas. 1992. A Rationale of Textual Criticism.


pages: 323 words: 95,939

Present Shock: When Everything Happens Now by Douglas Rushkoff

"Hurricane Katrina" Superdome, algorithmic trading, Alvin Toffler, Andrew Keen, bank run, behavioural economics, Benoit Mandelbrot, big-box store, Black Swan, British Empire, Buckminster Fuller, business cycle, cashless society, citizen journalism, clockwork universe, cognitive dissonance, Credit Default Swap, crowdsourcing, Danny Hillis, disintermediation, Donald Trump, double helix, East Village, Elliott wave, European colonialism, Extropian, facts on the ground, Flash crash, Future Shock, game design, global pandemic, global supply chain, global village, Howard Rheingold, hypertext link, Inbox Zero, invention of agriculture, invention of hypertext, invisible hand, iterative process, James Bridle, John Nash: game theory, Kevin Kelly, laissez-faire capitalism, lateral thinking, Law of Accelerating Returns, Lewis Mumford, loss aversion, mandelbrot fractal, Marshall McLuhan, Merlin Mann, messenger bag, Milgram experiment, mirror neurons, mutually assured destruction, negative equity, Network effects, New Urbanism, Nicholas Carr, Norbert Wiener, Occupy movement, off-the-grid, passive investing, pattern recognition, peak oil, Peter Pan Syndrome, price mechanism, prisoner's dilemma, Ralph Nelson Elliott, RAND corporation, Ray Kurzweil, recommendation engine, scientific management, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, SimCity, Skype, social graph, South Sea Bubble, Steve Jobs, Steve Wozniak, Steven Pinker, Stewart Brand, supply-chain management, technological determinism, the medium is the message, The Wisdom of Crowds, theory of mind, Tragedy of the Commons, Turing test, upwardly mobile, Whole Earth Catalog, WikiLeaks, Y2K, zero-sum game

The process is still poorly understood by social science, with its search for external causes of behavior, but is essential to bridging the largest chasm in intellectual life: that between individual psychology and collective culture.”13 As above, so below. The effort to make things on different levels conform to the same rules had become explicit. Economics writer and The Wisdom of Crowds author James Surowiecki explained to libertarian Reason magazine that Hayek’s notion of catallaxy—amplified by Santa Fe’s computers—could well become a universal approach to understanding humans: “In the 20th Century, this insight helped change the way people thought about markets. In the next century, it should change the way people think about organizations, networks, and the social order more generally.”14 And so scientists, economists, cultural theorists, and even military strategists15 end up adopting fractalnoia as the new approach to describing and predicting the behavior of both individual actors and the greater systems in which they live.


pages: 351 words: 100,791

The World Beyond Your Head: On Becoming an Individual in an Age of Distraction by Matthew B. Crawford

airport security, behavioural economics, Cass Sunstein, choice architecture, collateralized debt obligation, creative destruction, David Brooks, delayed gratification, dematerialisation, deskilling, digital Maoism, Google Glasses, hive mind, index card, informal economy, Jaron Lanier, large denomination, new economy, new new economy, Norman Mailer, online collectivism, Plato's cave, plutocrats, precautionary principle, Richard Thaler, Rodney Brooks, scientific management, self-driving car, Silicon Valley, Silicon Valley ideology, Stanford marshmallow experiment, tacit knowledge, the built environment, the scientific method, The Wisdom of Crowds, theory of mind, Walter Mischel, winner-take-all economy

The effect of this publicity was to make no place safe from the idea of normalcy.5 INDIVIDUALITY IS PASSÉ Merely to raise concern about the fate of individuality in contemporary culture is probably to appear old-fashioned. It would seem to be a 1950s through 1970s sort of preoccupation, the stuff of The Catcher in the Rye or the cigarette and hi-fi advertisements in your dad’s old Playboys. “Conformity” was the great worry of half a century ago. Now we are fascinated with “the wisdom of crowds” and “the hive mind.” We are told that there is a superior global intelligence arising in the Web itself. This collective mind is more meta, more synoptic and synthetic, than any one of us, and aren’t these the defining features of intelligence? Of course all this crowd-loving lines up pretty well with Silicon Valley’s distaste for the concept of intellectual property, and with the fact that there is a lot more money to be made as an aggregator of “content” than as a producer of it.


pages: 324 words: 96,491

Messing With the Enemy: Surviving in a Social Media World of Hackers, Terrorists, Russians, and Fake News by Clint Watts

4chan, active measures, Affordable Care Act / Obamacare, barriers to entry, behavioural economics, Bellingcat, Berlin Wall, Bernie Sanders, Black Lives Matter, Cambridge Analytica, Chelsea Manning, Climatic Research Unit, crowdsourcing, Daniel Kahneman / Amos Tversky, disinformation, Donald Trump, drone strike, Edward Snowden, en.wikipedia.org, Erik Brynjolfsson, failed state, fake news, Fall of the Berlin Wall, false flag, Filter Bubble, global pandemic, Google Earth, Hacker News, illegal immigration, information security, Internet of things, Jacob Silverman, Julian Assange, loss aversion, Mark Zuckerberg, Mikhail Gorbachev, mobile money, mutually assured destruction, obamacare, Occupy movement, offshore financial centre, operational security, pre–internet, Russian election interference, Sheryl Sandberg, side project, Silicon Valley, Snapchat, Steve Bannon, the long tail, The Wisdom of Crowds, Turing test, University of East Anglia, Valery Gerasimov, WikiLeaks, Yochai Benkler, zero day

During breaks, academic presenters often conducted a hasty Google search and revealed to these analog counterterrorists that their precious secret intelligence sat on the World Wide Web for everyone to see. The advantages the U.S. intelligence community had once enjoyed were slipping away in the open-source world. A few years before, in 2004, American journalist James Surowiecki had published a book called The Wisdom of Crowds, which described how the internet provided a vehicle for crowds to make smarter decisions than even the smartest person in the crowd, working alone, could make. Collective intelligence mined from the internet through crowdsourcing proved effective in three types of decisions: coordination challenges, where groups work together to determine an optimal solution, such as the best way to get to work or travel overseas; cognition calculations, where people involved in a market compete to provide the right answer, such as guessing the winner of an election; and cooperation networks, where a central system collects information and the crowd then controls behavior and enforces compliance—think Wikipedia as an example.


The Unusual Billionaires by Saurabh Mukherjea

Albert Einstein, asset light, Atul Gawande, backtesting, barriers to entry, Black-Scholes formula, book value, British Empire, business cycle, business intelligence, business process, buy and hold, call centre, Checklist Manifesto, commoditize, compound rate of return, corporate governance, dematerialisation, disintermediation, diversification, equity risk premium, financial innovation, forensic accounting, full employment, inventory management, low cost airline, low interest rates, Mahatma Gandhi, Peter Thiel, QR code, risk free rate, risk-adjusted returns, shareholder value, Silicon Valley, Steve Jobs, supply-chain management, The Wisdom of Crowds, transaction costs, upwardly mobile, Vilfredo Pareto, wealth creators, work culture

Throughout the late 1990s, HDFC Bank’s ROA (return on assets, an indicator of a bank’s profitability which is calculated by dividing net profit by total assets) was 100 bps higher than that of its peers. Phase 2: 2000–08 Building the Retail Bank ‘The fundamental problem with banks is what it’s always been: they’re in the business of banking, and banking, whether plain vanilla or incredibly sophisticated is inherently risky.’—James Surowiecki, author of The Wisdom of Crowds (2004). HDFC Bank was acutely aware of the opportunities that lay in retail banking: taking savings deposits from customers and in turn providing them loans like car loans, credit cards, etc. Whilst the bank had started talking about the opportunity in 1997, the focus of the bank was still on building its corporate franchise and there was no separate retail group within the bank.


pages: 318 words: 99,524

Why Aren't They Shouting?: A Banker’s Tale of Change, Computers and Perpetual Crisis by Kevin Rodgers

Alan Greenspan, algorithmic trading, bank run, banking crisis, Basel III, Bear Stearns, Berlin Wall, Big bang: deregulation of the City of London, bitcoin, Black Monday: stock market crash in 1987, Black-Scholes formula, buy and hold, buy low sell high, call centre, capital asset pricing model, collapse of Lehman Brothers, Credit Default Swap, currency peg, currency risk, diversification, Fall of the Berlin Wall, financial innovation, Financial Instability Hypothesis, fixed income, Flash crash, Francis Fukuyama: the end of history, Glass-Steagall Act, Hyman Minsky, implied volatility, index fund, interest rate derivative, interest rate swap, invisible hand, John Meriwether, latency arbitrage, law of one price, light touch regulation, London Interbank Offered Rate, Long Term Capital Management, Minsky moment, money market fund, Myron Scholes, Northern Rock, Panopticon Jeremy Bentham, Ponzi scheme, prisoner's dilemma, proprietary trading, quantitative easing, race to the bottom, risk tolerance, risk-adjusted returns, Silicon Valley, systems thinking, technology bubble, The Myth of the Rational Market, The Wisdom of Crowds, Tobin tax, too big to fail, value at risk, vertical integration, Y2K, zero-coupon bond, zero-sum game

A widespread faith in the efficacy and inexorable ‘rightness’ of markets led, first from changes in the US, and then via inter-country rivalry, to a regulatory framework embodying the belief that professionals had, in Alan Greenspan’s words, ‘[the] ability to protect themselves’. What is ironic is that the banking industry, in a reverse of the idea of ‘the wisdom of crowds’ that lay at the foundation of the theory of efficient markets, took a lot of extremely clever people and, collectively, as a mass, contrived to have us act like idiots. A simplifying idea (markets are right, rational and self-correcting) had been draped comfortingly over the complex reality of an entire industry in much the same way as simplifications like VaR or credit ratings obscured the complex reality of risk.


pages: 1,034 words: 241,773

Enlightenment Now: The Case for Reason, Science, Humanism, and Progress by Steven Pinker

3D printing, Abraham Maslow, access to a mobile phone, affirmative action, Affordable Care Act / Obamacare, agricultural Revolution, Albert Einstein, Alfred Russel Wallace, Alignment Problem, An Inconvenient Truth, anti-communist, Anton Chekhov, Arthur Eddington, artificial general intelligence, availability heuristic, Ayatollah Khomeini, basic income, Berlin Wall, Bernie Sanders, biodiversity loss, Black Swan, Bonfire of the Vanities, Brexit referendum, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, carbon tax, Charlie Hebdo massacre, classic study, clean water, clockwork universe, cognitive bias, cognitive dissonance, Columbine, conceptual framework, confounding variable, correlation does not imply causation, creative destruction, CRISPR, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, dark matter, data science, decarbonisation, degrowth, deindustrialization, dematerialisation, demographic transition, Deng Xiaoping, distributed generation, diversified portfolio, Donald Trump, Doomsday Clock, double helix, Eddington experiment, Edward Jenner, effective altruism, Elon Musk, en.wikipedia.org, end world poverty, endogenous growth, energy transition, European colonialism, experimental subject, Exxon Valdez, facts on the ground, fake news, Fall of the Berlin Wall, first-past-the-post, Flynn Effect, food miles, Francis Fukuyama: the end of history, frictionless, frictionless market, Garrett Hardin, germ theory of disease, Gini coefficient, Great Leap Forward, Hacker Conference 1984, Hans Rosling, hedonic treadmill, helicopter parent, Herbert Marcuse, Herman Kahn, Hobbesian trap, humanitarian revolution, Ignaz Semmelweis: hand washing, income inequality, income per capita, Indoor air pollution, Intergovernmental Panel on Climate Change (IPCC), invention of writing, Jaron Lanier, Joan Didion, job automation, Johannes Kepler, John Snow's cholera map, Kevin Kelly, Khan Academy, knowledge economy, l'esprit de l'escalier, Laplace demon, launch on warning, life extension, long peace, longitudinal study, Louis Pasteur, Mahbub ul Haq, Martin Wolf, mass incarceration, meta-analysis, Michael Shellenberger, microaggression, Mikhail Gorbachev, minimum wage unemployment, moral hazard, mutually assured destruction, Naomi Klein, Nate Silver, Nathan Meyer Rothschild: antibiotics, negative emissions, Nelson Mandela, New Journalism, Norman Mailer, nuclear taboo, nuclear winter, obamacare, ocean acidification, Oklahoma City bombing, open economy, opioid epidemic / opioid crisis, paperclip maximiser, Paris climate accords, Paul Graham, peak oil, Peter Singer: altruism, Peter Thiel, post-truth, power law, precautionary principle, precision agriculture, prediction markets, public intellectual, purchasing power parity, radical life extension, Ralph Nader, randomized controlled trial, Ray Kurzweil, rent control, Republic of Letters, Richard Feynman, road to serfdom, Robert Gordon, Rodney Brooks, rolodex, Ronald Reagan, Rory Sutherland, Saturday Night Live, science of happiness, Scientific racism, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, Silicon Valley ideology, Simon Kuznets, Skype, smart grid, Social Justice Warrior, sovereign wealth fund, sparse data, stem cell, Stephen Hawking, Steve Bannon, Steven Pinker, Stewart Brand, Stuxnet, supervolcano, synthetic biology, tech billionaire, technological determinism, technological singularity, Ted Kaczynski, Ted Nordhaus, TED Talk, The Rise and Fall of American Growth, the scientific method, The Signal and the Noise by Nate Silver, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, total factor productivity, Tragedy of the Commons, union organizing, universal basic income, University of East Anglia, Unsafe at Any Speed, Upton Sinclair, uranium enrichment, urban renewal, W. E. B. Du Bois, War on Poverty, We wanted flying cars, instead we got 140 characters, women in the workforce, working poor, World Values Survey, Y2K

Communities can thereby come up with rules that allow true beliefs to emerge from the rough-and-tumble of argument, such as that you have to provide reasons for your beliefs, you’re allowed to point out flaws in the beliefs of others, and you’re not allowed to forcibly shut people up who disagree with you. Add in the rule that you should allow the world to show you whether your beliefs are true or false, and we can call the rules science. With the right rules, a community of less than fully rational thinkers can cultivate rational thoughts.31 The wisdom of crowds can also elevate our moral sentiments. When a wide enough circle of people confer on how best to treat each other, the conversation is bound to go in certain directions. If my starting offer is “I get to rob, beat, enslave, and kill you and your kind, but you don’t get to rob, beat, enslave, or kill me or my kind,” I can’t expect you to agree to the deal or third parties to ratify it, because there’s no good reason that I should get privileges just because I’m me and you’re not.32 Nor are we likely to agree to the deal “I get to rob, beat, enslave, and kill you and your kind, and you get to rob, beat, enslave, and kill me and my kind,” despite its symmetry, because the advantages either of us might get in harming the other are massively outweighed by the disadvantages we would suffer in being harmed (yet another implication of the Law of Entropy: harms are easier to inflict and have larger effects than benefits).

That meant that the chance of an Islamist attack in Western Europe by the end of March was about one in three. A manner of forecasting very different from the way most people think led to a very different forecast. Two other traits distinguish superforecasters from pundits and chimpanzees. The superforecasters believe in the wisdom of crowds, laying their hypotheses on the table for others to criticize or amend and pooling their estimates with those of others. And they have strong opinions on chance and contingency in human history as opposed to necessity and fate. Tetlock and Mellers asked different groups of people whether they agreed with statements like the following: Events unfold according to God’s plan.


pages: 459 words: 103,153

Adapt: Why Success Always Starts With Failure by Tim Harford

An Inconvenient Truth, Andrew Wiles, banking crisis, Basel III, behavioural economics, Berlin Wall, Bernie Madoff, Black Swan, Boeing 747, business logic, car-free, carbon footprint, carbon tax, Cass Sunstein, charter city, Clayton Christensen, clean water, cloud computing, cognitive dissonance, complexity theory, corporate governance, correlation does not imply causation, creative destruction, credit crunch, Credit Default Swap, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, Dava Sobel, Deep Water Horizon, Deng Xiaoping, disruptive innovation, double entry bookkeeping, Edmond Halley, en.wikipedia.org, Erik Brynjolfsson, experimental subject, Fall of the Berlin Wall, Fermat's Last Theorem, financial engineering, Firefox, food miles, Gerolamo Cardano, global supply chain, Great Leap Forward, Herman Kahn, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, Jane Jacobs, Jarndyce and Jarndyce, Jarndyce and Jarndyce, John Harrison: Longitude, knowledge worker, loose coupling, Martin Wolf, mass immigration, Menlo Park, Mikhail Gorbachev, mutually assured destruction, Netflix Prize, New Urbanism, Nick Leeson, PageRank, Piper Alpha, profit motive, Richard Florida, Richard Thaler, rolodex, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, South China Sea, SpaceShipOne, special economic zone, spectrum auction, Steve Jobs, supply-chain management, tacit knowledge, the market place, The Wisdom of Crowds, too big to fail, trade route, Tyler Cowen, Tyler Cowen: Great Stagnation, Virgin Galactic, web application, X Prize, zero-sum game

Available at: http://timharford.com/2009/11/how-a-celebrity-chef-turned-into-a-social-scientist/; and Michele Belot and Jonathan James, ‘Healthy School Meals and Educational Achievements’, Nuffield College Working Paper. Available at: http://cess-wb.nuff.ox.ac.uk/downloads/schoolmeals.pdf 30 There is some evidence that the more ambitious: see James Surowiecki, The Wisdom of Crowds (London: Abacus, 2005), pp. 253–4. Surowiecki refers to two studies that reach this commonsense conclusion, but I have not been able to discover a precise citation. 30 Even when leaders and managers: Mancur Olson, Power and Prosperity (New York: Basic Books, 2000), pp. 138–9. 31 I spent the summer of 2005 studying poker: Tim Harford, ‘The Poker Machine’, Financial Times, 6 May 2006.


pages: 764 words: 261,694

The Elements of Statistical Learning (Springer Series in Statistics) by Trevor Hastie, Robert Tibshirani, Jerome Friedman

algorithmic bias, backpropagation, Bayesian statistics, bioinformatics, computer age, conceptual framework, correlation coefficient, data science, G4S, Geoffrey Hinton, greed is good, higher-order functions, linear programming, p-value, pattern recognition, random walk, selection bias, sparse data, speech recognition, statistical model, stochastic process, The Wisdom of Crowds

Suppose each of the weak learners G∗b have an error-rate eb = e < 0.5, and let S1 (x) = PB ∗ b=1 I(Gb (x) = 1) be the consensus vote for class 1. Since the weak learners are assumed to be independent, S1 (x) ∼ Bin(B, 1 − e), and Pr(S1 > B/2) → 1 as B gets large. This concept has been popularized outside of statistics as the “Wisdom of Crowds” (Surowiecki, 2004) — the collective knowledge of a diverse and independent body of people typically exceeds the knowledge of any single individual, and can be harnessed by voting. Of course, the main caveat here is “independent,” and bagged trees are not. Figure 8.11 illustrates the power of a consensus vote in a simulated example, where only 30% of the voters have some knowledge.

Statistical significance for genomewide studies, Proceedings of the National Academy of Sciences 100-: 9440– 9445. Storey, J., Taylor, J. and Siegmund, D. (2004). Strong control, conservative point estimation, and simultaneous conservative consistency of false discovery rates: A unified approach., Journal of the Royal Statistical Society, Series B 66: 187–205. 724 References Surowiecki, J. (2004). The Wisdom of Crowds: Why the Many are Smarter than the Few and How Collective Wisdom Shapes Business, Economics, Societies and Nations., Little, Brown. Swayne, D., Cook, D. and Buja, A. (1991). Xgobi: Interactive dynamic graphics in the X window system with a link to S, ASA Proceedings of Section on Statistical Graphics, pp. 1–8.


pages: 302 words: 82,233

Beautiful security by Andy Oram, John Viega

Albert Einstein, Amazon Web Services, An Inconvenient Truth, Bletchley Park, business intelligence, business process, call centre, cloud computing, corporate governance, credit crunch, crowdsourcing, defense in depth, do well by doing good, Donald Davies, en.wikipedia.org, fault tolerance, Firefox, information security, loose coupling, Marc Andreessen, market design, MITM: man-in-the-middle, Monroe Doctrine, new economy, Nicholas Carr, Nick Leeson, Norbert Wiener, operational security, optical character recognition, packet switching, peer-to-peer, performance metric, pirate software, Robert Bork, Search for Extraterrestrial Intelligence, security theater, SETI@home, Silicon Valley, Skype, software as a service, SQL injection, statistical model, Steven Levy, the long tail, The Wisdom of Crowds, Upton Sinclair, web application, web of trust, zero day, Zimmermann PGP

Imagine the effectiveness of a more professional social network where security engineers could share empirical data and results from tests and experiments. Security in Numbers Social networking isn’t just about connecting people into groups to trade. It’s a medium for crowdsourcing, which exploits the wisdom of crowds to predict information. This could also play an interesting role in the future security market. To give you a simple example of crowdsourcing, one Friday at work someone on my team sent out a simple spreadsheet containing a quiz. It was late morning on the East Coast, and therefore late on Friday afternoon in Europe and late evening in our Hyderabad office.


pages: 416 words: 118,592

A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing by Burton G. Malkiel

accounting loophole / creative accounting, Alan Greenspan, Albert Einstein, asset allocation, asset-backed security, backtesting, Bear Stearns, beat the dealer, Bernie Madoff, book value, BRICs, butter production in bangladesh, buy and hold, capital asset pricing model, compound rate of return, correlation coefficient, Credit Default Swap, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, dogs of the Dow, Edward Thorp, Elliott wave, Eugene Fama: efficient market hypothesis, experimental subject, feminist movement, financial engineering, financial innovation, fixed income, framing effect, hindsight bias, Home mortgage interest deduction, index fund, invisible hand, Isaac Newton, Japanese asset price bubble, John Bogle, junk bonds, Long Term Capital Management, loss aversion, low interest rates, margin call, market bubble, Mary Meeker, money market fund, mortgage tax deduction, new economy, Own Your Own Home, PalmPilot, passive investing, Paul Samuelson, pets.com, Ponzi scheme, price stability, profit maximization, publish or perish, purchasing power parity, RAND corporation, random walk, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, short selling, Silicon Valley, South Sea Bubble, stock buybacks, stocks for the long run, sugar pill, survivorship bias, The Myth of the Rational Market, the rule of 72, The Wisdom of Crowds, transaction costs, Vanguard fund, zero-coupon bond

Arcane as this all may seem, the representativeness heuristic is likely to account for a number of investing mistakes such as chasing hot funds or excessive extrapolation from recent evidence. Herding In general, research shows that groups tend to make better decisions than individuals. If more information is shared, and if differing points of view are considered, informed discussion of the group improves the decision-making process. The wisdom of crowd behavior is perhaps best illustrated in the economy as a whole by the free-market price system. A variety of individual decisions by consumers and producers leads the economy to produce the goods and services that people want to buy. Responding to the forces of demand and supply, the price system guides the economy through Adam Smith’s invisible hand to produce the correct quantity of products.


pages: 385 words: 118,314

Cities Are Good for You: The Genius of the Metropolis by Leo Hollis

Airbnb, Alvin Toffler, banking crisis, Berlin Wall, Big Tech, Boris Johnson, Broken windows theory, Buckminster Fuller, call centre, car-free, carbon footprint, cellular automata, classic study, clean water, cloud computing, complexity theory, congestion charging, creative destruction, credit crunch, Credit Default Swap, crowdsourcing, Deng Xiaoping, digital divide, digital map, Disneyland with the Death Penalty, Donald Shoup, East Village, Edward Glaeser, Elisha Otis, Enrique Peñalosa, export processing zone, Firefox, Frank Gehry, General Motors Futurama, Geoffrey West, Santa Fe Institute, Gini coefficient, Google Earth, Great Leap Forward, Guggenheim Bilbao, haute couture, Hernando de Soto, high-speed rail, housing crisis, illegal immigration, income inequality, informal economy, Internet of things, invisible hand, Jane Jacobs, Jevons paradox, Kickstarter, knowledge economy, knowledge worker, Leo Hollis, Lewis Mumford, Long Term Capital Management, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, Masdar, mass immigration, megacity, negative equity, Neil Armstrong, new economy, New Urbanism, Occupy movement, off-the-grid, openstreetmap, packet switching, Panopticon Jeremy Bentham, place-making, power law, Quicken Loans, Ray Oldenburg, Richard Florida, sharing economy, Silicon Valley, Skype, smart cities, smart grid, spice trade, Steve Jobs, technoutopianism, the built environment, The Chicago School, The Death and Life of Great American Cities, The Great Good Place, the High Line, The Spirit Level, the strength of weak ties, The Wisdom of Crowds, Thomas Malthus, trade route, traveling salesman, urban planning, urban renewal, urban sprawl, walkable city, white flight, Y2K, Yom Kippur War

Instead, many planners now recognise the value of a street-up approach, of designing for the way that people actually live rather than the way one might hope they behave. One way of opening the potential for street-up communities is by doing away with planning restrictions altogether: let the people decide what their neighbourhoods look like. If you believe in the wisdom of crowds, the result is likely to be more complex and interesting than a community built from the imagination of one architect. In the district of Almere, on the outskirts of Amsterdam, such an experiment is underway. Holland is one of the most densely populated nations in Europe, so every inch of land needs to be managed and planned to cope with the demands of a growing population; yet in this unique neck of the woods it is still thought that allowing people to self-build their own homes may be the best way forward.


pages: 401 words: 115,959

Philanthrocapitalism by Matthew Bishop, Michael Green, Bill Clinton

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Abraham Maslow, Albert Einstein, An Inconvenient Truth, anti-communist, AOL-Time Warner, barriers to entry, battle of ideas, Bernie Madoff, Big Tech, Bob Geldof, Bonfire of the Vanities, business process, business process outsourcing, Charles Lindbergh, clean tech, clean water, corporate governance, corporate social responsibility, Dava Sobel, David Ricardo: comparative advantage, digital divide, do well by doing good, don't be evil, family office, financial innovation, full employment, global pandemic, global village, Global Witness, God and Mammon, Hernando de Soto, high net worth, Ida Tarbell, Intergovernmental Panel on Climate Change (IPCC), invisible hand, James Dyson, John Elkington, John Harrison: Longitude, joint-stock company, junk bonds, knowledge economy, knowledge worker, Larry Ellison, Live Aid, lone genius, Marc Andreessen, Marc Benioff, market bubble, mass affluent, Michael Milken, microcredit, Mikhail Gorbachev, Neil Armstrong, Nelson Mandela, new economy, offshore financial centre, old-boy network, PalmPilot, peer-to-peer lending, performance metric, Peter Singer: altruism, plutocrats, profit maximization, profit motive, Richard Feynman, risk tolerance, risk-adjusted returns, Ronald Coase, Ronald Reagan, Salesforce, scientific management, seminal paper, shareholder value, Silicon Valley, Slavoj Žižek, South Sea Bubble, sovereign wealth fund, SpaceShipOne, stem cell, Steve Jobs, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade liberalization, transaction costs, trickle-down economics, Tyler Cowen, wealth creators, winner-take-all economy, working poor, World Values Survey, X Prize

Those customers were significantly more likely to shop again at Crate & Barrel than those in a control group who did not receive a voucher (and many of them gave additional money of their own once they came to the site and got excited by a project). “Customers love being trusted,” says Best. Even more exciting is the possibility of joining with sites such as DonorsChoose and Kiva to tap the “wisdom of crowds”—the possibility that large groups in aggregate may have a better grasp of the truth than a few so-called experts looking down on a situation from above. In 2009, the Gates Foundation allocated $4 million to match any gifts made by citizen philanthropists to projects posted on DonorsChoose by high school teachers preparing students to go to college.


Super Thinking: The Big Book of Mental Models by Gabriel Weinberg, Lauren McCann

Abraham Maslow, Abraham Wald, affirmative action, Affordable Care Act / Obamacare, Airbnb, Albert Einstein, anti-pattern, Anton Chekhov, Apollo 13, Apple Newton, autonomous vehicles, bank run, barriers to entry, Bayesian statistics, Bernie Madoff, Bernie Sanders, Black Swan, Broken windows theory, business process, butterfly effect, Cal Newport, Clayton Christensen, cognitive dissonance, commoditize, correlation does not imply causation, crowdsourcing, Daniel Kahneman / Amos Tversky, dark pattern, David Attenborough, delayed gratification, deliberate practice, discounted cash flows, disruptive innovation, Donald Trump, Douglas Hofstadter, Dunning–Kruger effect, Edward Lorenz: Chaos theory, Edward Snowden, effective altruism, Elon Musk, en.wikipedia.org, experimental subject, fake news, fear of failure, feminist movement, Filter Bubble, framing effect, friendly fire, fundamental attribution error, Goodhart's law, Gödel, Escher, Bach, heat death of the universe, hindsight bias, housing crisis, if you see hoof prints, think horses—not zebras, Ignaz Semmelweis: hand washing, illegal immigration, imposter syndrome, incognito mode, income inequality, information asymmetry, Isaac Newton, Jeff Bezos, John Nash: game theory, karōshi / gwarosa / guolaosi, lateral thinking, loss aversion, Louis Pasteur, LuLaRoe, Lyft, mail merge, Mark Zuckerberg, meta-analysis, Metcalfe’s law, Milgram experiment, minimum viable product, moral hazard, mutually assured destruction, Nash equilibrium, Network effects, nocebo, nuclear winter, offshore financial centre, p-value, Paradox of Choice, Parkinson's law, Paul Graham, peak oil, Peter Thiel, phenotype, Pierre-Simon Laplace, placebo effect, Potemkin village, power law, precautionary principle, prediction markets, premature optimization, price anchoring, principal–agent problem, publication bias, recommendation engine, remote working, replication crisis, Richard Feynman, Richard Feynman: Challenger O-ring, Richard Thaler, ride hailing / ride sharing, Robert Metcalfe, Ronald Coase, Ronald Reagan, Salesforce, school choice, Schrödinger's Cat, selection bias, Shai Danziger, side project, Silicon Valley, Silicon Valley startup, speech recognition, statistical model, Steve Jobs, Steve Wozniak, Steven Pinker, Streisand effect, sunk-cost fallacy, survivorship bias, systems thinking, The future is already here, The last Blockbuster video rental store is in Bend, Oregon, The Present Situation in Quantum Mechanics, the scientific method, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Tragedy of the Commons, transaction costs, uber lyft, ultimatum game, uranium enrichment, urban planning, vertical integration, Vilfredo Pareto, warehouse robotics, WarGames: Global Thermonuclear War, When a measure becomes a target, wikimedia commons

Crowdsourcing can help you get a sense of what a wide array of people think about a topic, which can inform your future decision making, updating your prior beliefs (see Bayesian statistics in Chapter 5). It can also help you uncover unknown unknowns and unknown knowns as you get feedback from people with previous experiences you might not have had. In James Surowiecki’s book The Wisdom of Crowds, he examines situations where input from crowds can be particularly effective. It opens with a story about how the crowd at a county fair in 1906, attended by statistician Francis Galton, correctly guessed the weight of an ox. Almost eight hundred people participated, each individually guessing, and the average weight guessed was 1,197 pounds—exactly the weight of the ox, to the pound!


pages: 518 words: 49,555

Designing Social Interfaces by Christian Crumlish, Erin Malone

A Pattern Language, Amazon Mechanical Turk, anti-pattern, barriers to entry, c2.com, carbon footprint, cloud computing, collaborative editing, commons-based peer production, creative destruction, crowdsourcing, en.wikipedia.org, Firefox, folksonomy, Free Software Foundation, game design, ghettoisation, Howard Rheingold, hypertext link, if you build it, they will come, information security, lolcat, Merlin Mann, Nate Silver, Network effects, Potemkin village, power law, recommendation engine, RFC: Request For Comment, semantic web, SETI@home, Skype, slashdot, social bookmarking, social graph, social software, social web, source of truth, stealth mode startup, Stewart Brand, systems thinking, tacit knowledge, telepresence, the long tail, the strength of weak ties, The Wisdom of Crowds, web application, Yochai Benkler

These sites count on each person bringing his personal network into the online experience. The concept of tribes and friends has become more important than ever and has driven the development of many products. What was ho-hum in 1997 is now the core—for user features as well as opportunities for making money. Additionally, the power of the many, or the wisdom of crowds, is being leveraged to exert some control over content creation and self-moderation processes. Companies are learning that successful social experiences shouldn’t and can’t be overly controlled. They are learning they can leverage the crowd to do some of the heavy lifting, which in turn spares them some of the costs.


pages: 298 words: 43,745

Understanding Sponsored Search: Core Elements of Keyword Advertising by Jim Jansen

AltaVista, AOL-Time Warner, barriers to entry, behavioural economics, Black Swan, bounce rate, business intelligence, butterfly effect, call centre, Claude Shannon: information theory, complexity theory, content marketing, correlation does not imply causation, data science, en.wikipedia.org, first-price auction, folksonomy, Future Shock, information asymmetry, information retrieval, intangible asset, inventory management, life extension, linear programming, longitudinal study, machine translation, megacity, Nash equilibrium, Network effects, PageRank, place-making, power law, price mechanism, psychological pricing, random walk, Schrödinger's Cat, sealed-bid auction, search costs, search engine result page, second-price auction, second-price sealed-bid, sentiment analysis, social bookmarking, social web, software as a service, stochastic process, tacit knowledge, telemarketer, the market place, The Present Situation in Quantum Mechanics, the scientific method, The Wisdom of Crowds, Vickrey auction, Vilfredo Pareto, yield management

“Auctions and Bidding.” Journal of Economic Literature, vol. 25(2), pp. 699–738. ╇ [5] Krishna, V. 2002. Auction Theory. San Diego, CA: Academic Press. ╇ [6] Varian, H. R. 2007. “Position Auctions.” International Journal of Industrial Organization, vol. 25(6), pp. 1163–1178. ╇ [7] Surowiecki, J. 2004. The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations. New York: Random House. ╇ [8] Jansen, B. J. and Mullen, T. 2008. “Sponsored Search: An Overview of the Concept, History, and Technology.” International Journal of Electronic Business, vol. 6(2), pp. 114–131. ╇ [9] Zhou, Y. and Lukose, R. 2006.


pages: 309 words: 114,984

The Digital Doctor: Hope, Hype, and Harm at the Dawn of Medicine’s Computer Age by Robert Wachter

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, AI winter, Airbnb, Atul Gawande, Captain Sullenberger Hudson, Checklist Manifesto, Chuck Templeton: OpenTable:, Clayton Christensen, cognitive load, collapse of Lehman Brothers, computer age, creative destruction, crowdsourcing, deep learning, deskilling, disruptive innovation, driverless car, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, Firefox, Frank Levy and Richard Murnane: The New Division of Labor, general purpose technology, Google Glasses, human-factors engineering, hype cycle, Ignaz Semmelweis: hand washing, Internet of things, job satisfaction, Joseph Schumpeter, Kickstarter, knowledge worker, lifelogging, Marc Benioff, medical malpractice, medical residency, Menlo Park, minimum viable product, natural language processing, Network effects, Nicholas Carr, obamacare, pattern recognition, peer-to-peer, personalized medicine, pets.com, pneumatic tube, Productivity paradox, Ralph Nader, RAND corporation, Richard Hendricks, Robert Solow, Salesforce, Second Machine Age, self-driving car, seminal paper, Silicon Valley, Silicon Valley startup, six sigma, Skype, Snapchat, software as a service, Steve Jobs, Steven Levy, TED Talk, The future is already here, the payments system, The Wisdom of Crowds, Thomas Bayes, Toyota Production System, Uber for X, US Airways Flight 1549, Watson beat the top human players on Jeopardy!, Yogi Berra

With the advent of widespread and increasingly expensive copayments and deductibles, the temptation for patients to self-diagnose, self-treat, and crowdsource medical advice over the Web will become irresistible. After all, how many of us consult “expert” restaurant reviews anymore? We trust the wisdom of crowds on sites like Yelp and TripAdvisor. As we enter a similarly information-rich world in healthcare, patients will face this question with greater frequency: When do I really need to consult with, and trust, a credentialed expert? There will be times when the answer is obvious, but increasingly the line will be shifting and subtle.


pages: 523 words: 112,185

Doing Data Science: Straight Talk From the Frontline by Cathy O'Neil, Rachel Schutt

Amazon Mechanical Turk, augmented reality, Augustin-Louis Cauchy, barriers to entry, Bayesian statistics, bike sharing, bioinformatics, computer vision, confounding variable, correlation does not imply causation, crowdsourcing, data science, distributed generation, Dunning–Kruger effect, Edward Snowden, Emanuel Derman, fault tolerance, Filter Bubble, finite state, Firefox, game design, Google Glasses, index card, information retrieval, iterative process, John Harrison: Longitude, Khan Academy, Kickstarter, machine translation, Mars Rover, Nate Silver, natural language processing, Netflix Prize, p-value, pattern recognition, performance metric, personalized medicine, pull request, recommendation engine, rent-seeking, selection bias, Silicon Valley, speech recognition, statistical model, stochastic process, tacit knowledge, text mining, the scientific method, The Wisdom of Crowds, Watson beat the top human players on Jeopardy!, X Prize

Terminology: Crowdsourcing and Mechanical Turks These are a couple of terms that have started creeping into the vernacular over the past few years. Although crowdsourcing—the concept of using many people to solve a problem independently—is not new, the term was only fairly recently coined in 2006. The basic idea is a that a challenge is issued and contestants compete to find the best solution. The Wisdom of Crowds was a book written by James Suriowiecki (Anchor, 2004) with the central thesis that, on average, crowds of people will make better decisions than experts, a related phenomenon. It is only under certain conditions (independence of the individuals rather than group-think where a group of people talking to each other can influence each other into wildly incorrect solutions), where groups of people can arrive at the correct solution.


pages: 405 words: 121,531

Influence: Science and Practice by Robert B. Cialdini

Albert Einstein, attribution theory, bank run, behavioural economics, cognitive dissonance, conceptual framework, desegregation, Everything should be made as simple as possible, experimental subject, Mars Rover, meta-analysis, Mikhail Gorbachev, Milgram experiment, Norman Macrae, Ralph Waldo Emerson, telemarketer, The Wisdom of Crowds

Journal of Applied Social Psychology, 32, 300–309. Styron, W. (1977). A farewell to arms. New York Review of Books, 24, 3–4. Suedfeld, P., Bochner, S., & Matas, C. (1971). Petitioner’s attire and petition signing by peace demonstrators: A field experiment. Journal of Applied Social Psychology, 1, 278–283. Surowiecki, J. (2004). The wisdom of crowds. New York: Doubleday. Swap, W. C. (1977). Interpersonal attraction and repeated exposure to rewards and punishers. Personality and Social Psychology Bulletin, 3, 248–251. Szabo, L. (2007, February 5). Patient protect thyself. USA Today, p. 8D. Taylor, R. (1978). Marilyn’s friends and Rita’s customers: A study of party selling as play and as work.


pages: 481 words: 125,946

What to Think About Machines That Think: Today's Leading Thinkers on the Age of Machine Intelligence by John Brockman

Adam Curtis, agricultural Revolution, AI winter, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, algorithmic trading, Anthropocene, artificial general intelligence, augmented reality, autism spectrum disorder, autonomous vehicles, backpropagation, basic income, behavioural economics, bitcoin, blockchain, bread and circuses, Charles Babbage, clean water, cognitive dissonance, Colonization of Mars, complexity theory, computer age, computer vision, constrained optimization, corporate personhood, cosmological principle, cryptocurrency, cuban missile crisis, Danny Hillis, dark matter, data science, deep learning, DeepMind, Demis Hassabis, digital capitalism, digital divide, digital rights, discrete time, Douglas Engelbart, driverless car, Elon Musk, Emanuel Derman, endowment effect, epigenetics, Ernest Rutherford, experimental economics, financial engineering, Flash crash, friendly AI, functional fixedness, global pandemic, Google Glasses, Great Leap Forward, Hans Moravec, hive mind, Ian Bogost, income inequality, information trail, Internet of things, invention of writing, iterative process, James Webb Space Telescope, Jaron Lanier, job automation, Johannes Kepler, John Markoff, John von Neumann, Kevin Kelly, knowledge worker, Large Hadron Collider, lolcat, loose coupling, machine translation, microbiome, mirror neurons, Moneyball by Michael Lewis explains big data, Mustafa Suleyman, natural language processing, Network effects, Nick Bostrom, Norbert Wiener, paperclip maximiser, pattern recognition, Peter Singer: altruism, phenotype, planetary scale, Ray Kurzweil, Recombinant DNA, recommendation engine, Republic of Letters, RFID, Richard Thaler, Rory Sutherland, Satyajit Das, Search for Extraterrestrial Intelligence, self-driving car, sharing economy, Silicon Valley, Skype, smart contracts, social intelligence, speech recognition, statistical model, stem cell, Stephen Hawking, Steve Jobs, Steven Pinker, Stewart Brand, strong AI, Stuxnet, superintelligent machines, supervolcano, synthetic biology, systems thinking, tacit knowledge, TED Talk, the scientific method, The Wisdom of Crowds, theory of mind, Thorstein Veblen, too big to fail, Turing machine, Turing test, Von Neumann architecture, Watson beat the top human players on Jeopardy!, We are as Gods, Y2K

Bacharach Professor Emerita of International Studies, University of Washington There are tasks, even work, best done by machines who can think—at least in the sense of sorting, matching, and solving certain decision and diagnostic problems beyond the cognitive abilities of most (all?) humans. The algorithms of Amazon, Google, Facebook, etc., build on but surpass the wisdom of crowds in speed and possibly accuracy. With machines that do some of our thinking and some of our work, we may yet approach the Marxian utopia that frees us from boring and dehumanizing labor. But this liberation comes with potential costs. Human welfare is more than the replacement of workers with machines.


pages: 482 words: 121,672

A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing (Eleventh Edition) by Burton G. Malkiel

accounting loophole / creative accounting, Alan Greenspan, Albert Einstein, asset allocation, asset-backed security, beat the dealer, Bernie Madoff, bitcoin, book value, butter production in bangladesh, buttonwood tree, buy and hold, capital asset pricing model, compound rate of return, correlation coefficient, Credit Default Swap, Daniel Kahneman / Amos Tversky, Detroit bankruptcy, diversification, diversified portfolio, dogs of the Dow, Edward Thorp, Elliott wave, equity risk premium, Eugene Fama: efficient market hypothesis, experimental subject, feminist movement, financial engineering, financial innovation, financial repression, fixed income, framing effect, George Santayana, hindsight bias, Home mortgage interest deduction, index fund, invisible hand, Isaac Newton, Japanese asset price bubble, John Bogle, junk bonds, Long Term Capital Management, loss aversion, low interest rates, margin call, market bubble, Mary Meeker, money market fund, mortgage tax deduction, new economy, Own Your Own Home, PalmPilot, passive investing, Paul Samuelson, pets.com, Ponzi scheme, price stability, profit maximization, publish or perish, purchasing power parity, RAND corporation, random walk, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Salesforce, short selling, Silicon Valley, South Sea Bubble, stock buybacks, stocks for the long run, sugar pill, survivorship bias, Teledyne, the rule of 72, The Wisdom of Crowds, transaction costs, Vanguard fund, zero-coupon bond, zero-sum game

Arcane as this all may seem, the representativeness heuristic is likely to account for a number of investing mistakes such as chasing hot funds or excessive extrapolation from recent evidence. Herding In general, research shows that groups tend to make better decisions than individuals. If more information is shared, and if differing points of view are considered, informed discussion of the group improves the decision-making process. The wisdom of crowd behavior is perhaps best illustrated in the economy as a whole by the free-market price system. A variety of individual decisions by consumers and producers leads the economy to produce the goods and services that people want to buy. Responding to the forces of demand and supply, the price system guides the economy through Adam Smith’s invisible hand to produce the correct quantity of products.


pages: 404 words: 124,705

The Village Effect: How Face-To-Face Contact Can Make Us Healthier, Happier, and Smarter by Susan Pinker

assortative mating, Atul Gawande, autism spectrum disorder, behavioural economics, Bernie Madoff, call centre, caloric restriction, caloric restriction, cognitive dissonance, David Brooks, delayed gratification, digital divide, Edward Glaeser, epigenetics, Erik Brynjolfsson, estate planning, facts on the ground, fixed-gear, game design, happiness index / gross national happiness, indoor plumbing, intentional community, invisible hand, Kickstarter, language acquisition, longitudinal study, Mark Zuckerberg, medical residency, Menlo Park, meta-analysis, mirror neurons, neurotypical, Occupy movement, old-boy network, One Laptop per Child (OLPC), place-making, Ponzi scheme, Ralph Waldo Emerson, randomized controlled trial, Ray Oldenburg, Silicon Valley, Skype, social contagion, social intelligence, Stanford marshmallow experiment, Steven Pinker, tacit knowledge, The Great Good Place, the strength of weak ties, The Wisdom of Crowds, theory of mind, tontine, Tony Hsieh, Twitter Arab Spring, urban planning, Yogi Berra

Instead of offering little to no training, basement-level wages, constantly changing schedules, minimal benefits, and no opportunities to move up (as experienced by nearly 20 percent of the American workforce), they “eliminated waste in everything but staffing, and let employees make some decisions,” she wrote.48 Their stores are better places to work, obviously, but they also generate more profit per square foot than their barebones competitors. Citing a study showing that every extra dollar a five-hundred-store retailer spent on payroll netted it between $4 and $28 in new sales, James Surowiecki, author of The Wisdom of Crowds, points out that the opposite is also true: cutting back on human resources can harm a business. Of course, if you have a lousy product selection, a bigger payroll won’t help much. But there’s a strong case to be made that corporate America’s fetish for cost-cutting has gone too far.… When Bob Nardelli took over Home Depot, in 2000, he reduced the number of salespeople on the floor and turned many full-time jobs into part-time ones.


pages: 525 words: 116,295

The New Digital Age: Transforming Nations, Businesses, and Our Lives by Eric Schmidt, Jared Cohen

access to a mobile phone, additive manufacturing, airport security, Amazon Mechanical Turk, Amazon Web Services, Andy Carvin, Andy Rubin, anti-communist, augmented reality, Ayatollah Khomeini, barriers to entry, bitcoin, borderless world, call centre, Chelsea Manning, citizen journalism, clean water, cloud computing, crowdsourcing, data acquisition, Dean Kamen, disinformation, driverless car, drone strike, Elon Musk, Evgeny Morozov, failed state, false flag, fear of failure, Filter Bubble, Google Earth, Google Glasses, Hacker Conference 1984, hive mind, income inequality, information security, information trail, invention of the printing press, job automation, John Markoff, Julian Assange, Khan Academy, Kickstarter, knowledge economy, Law of Accelerating Returns, market fundamentalism, Mary Meeker, means of production, military-industrial complex, MITM: man-in-the-middle, mobile money, mutually assured destruction, Naomi Klein, Nelson Mandela, no-fly zone, off-the-grid, offshore financial centre, Parag Khanna, peer-to-peer, peer-to-peer lending, personalized medicine, Peter Singer: altruism, power law, Ray Kurzweil, RFID, Robert Bork, self-driving car, sentiment analysis, Silicon Valley, Skype, Snapchat, social graph, speech recognition, Steve Jobs, Steven Pinker, Stewart Brand, Stuxnet, Susan Wojcicki, The Wisdom of Crowds, upwardly mobile, Whole Earth Catalog, WikiLeaks, young professional, zero day

As we grow accustomed to this change, we also learn that the two worlds are not mutually exclusive, and what happens in one has consequences in the other. What seem like defined debates today over security and privacy will broaden to questions of who controls and influences virtual identities and thus citizens themselves. Democracies will become more influenced by the wisdom of crowds (for better or for worse), poor autocracies will struggle to acquire the necessary resources to effectively extend control into the virtual world, and wealthier dictatorships will build modern police states that tighten their grip on citizens’ lives. These changes will spur new behaviors and progressive laws, but given the sophistication of the technologies involved, in most cases citizens stand to lose many of the protections they feel and rely upon today.


pages: 497 words: 130,817

Pedigree: How Elite Students Get Elite Jobs by Lauren A. Rivera

affirmative action, availability heuristic, barriers to entry, behavioural economics, classic study, Donald Trump, emotional labour, fundamental attribution error, glass ceiling, income inequality, job satisfaction, knowledge economy, meritocracy, messenger bag, meta-analysis, new economy, performance metric, profit maximization, profit motive, school choice, Silicon Valley, Silicon Valley startup, tacit knowledge, tech worker, The Theory of the Leisure Class by Thorstein Veblen, The Wisdom of Crowds, unpaid internship, women in the workforce, young professional

Qualitative Sociology 34:337–52. Stuber, Jenny M. 2009. “Class, Culture, and Participation in the Collegiate Extra-Curriculum.” Sociological Forum 24:877–900. ———. 2011. Inside the College Gates: How Class and Culture Matter in Higher Education. Lanham, MD: Lexington Books. Surowiecki, James. 2005. The Wisdom of Crowds. New York: Knopf Doubleday. Swidler, Ann. 1986. “Culture in Action: Symbols and Strategies.” American Sociological Review 51:273–86. Thorndike, Edward. 1920. “A Constant Error in Psychological Ratings.” Journal of Applied Psychology 4:25–29. Tilcsik, András. 2011. “Pride and Prejudice: Employment Discrimination against Openly Gay Men in the United States.”


pages: 385 words: 128,358

Inside the House of Money: Top Hedge Fund Traders on Profiting in a Global Market by Steven Drobny

Abraham Maslow, Alan Greenspan, Albert Einstein, asset allocation, Berlin Wall, Bonfire of the Vanities, Bretton Woods, business cycle, buy and hold, buy low sell high, capital controls, central bank independence, commoditize, commodity trading advisor, corporate governance, correlation coefficient, Credit Default Swap, currency risk, diversification, diversified portfolio, family office, financial engineering, fixed income, glass ceiling, Glass-Steagall Act, global macro, Greenspan put, high batting average, implied volatility, index fund, inflation targeting, interest rate derivative, inventory management, inverted yield curve, John Meriwether, junk bonds, land bank, Long Term Capital Management, low interest rates, managed futures, margin call, market bubble, Market Wizards by Jack D. Schwager, Maui Hawaii, Mexican peso crisis / tequila crisis, moral hazard, Myron Scholes, new economy, Nick Leeson, Nixon triggered the end of the Bretton Woods system, oil shale / tar sands, oil shock, out of africa, panic early, paper trading, Paul Samuelson, Peter Thiel, price anchoring, proprietary trading, purchasing power parity, Reminiscences of a Stock Operator, reserve currency, risk free rate, risk tolerance, risk-adjusted returns, risk/return, rolodex, Sharpe ratio, short selling, Silicon Valley, tail risk, The Wisdom of Crowds, too big to fail, transaction costs, value at risk, Vision Fund, yield curve, zero-coupon bond, zero-sum game

I never locked myself down to investing in one style or in one country because the greatest trade in the world could be happening somewhere else. My advice would be to make sure that you do not become too much of an THE FAMILY OFFICE MANAGER 43 expert in one area. Even if you see an area that is inefficient today, it’s likely that it won’t be inefficient tomorrow. Expertise is overrated. There’s a book called The Wisdom of Crowds (by James Suroweicki) that contains a lot of examples where the average results of a group were much better estimators than expert opinions. We wrongly tend to look at other people as experts. If you ask currency experts where an exchange rate is going, they are just as likely to be wrong as some average guy on the street.


Stocks for the Long Run, 4th Edition: The Definitive Guide to Financial Market Returns & Long Term Investment Strategies by Jeremy J. Siegel

addicted to oil, Alan Greenspan, asset allocation, backtesting, behavioural economics, Black-Scholes formula, book value, Bretton Woods, business cycle, buy and hold, buy low sell high, California gold rush, capital asset pricing model, cognitive dissonance, compound rate of return, correlation coefficient, currency risk, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, dividend-yielding stocks, dogs of the Dow, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, Everybody Ought to Be Rich, fixed income, German hyperinflation, implied volatility, index arbitrage, index fund, Isaac Newton, it's over 9,000, John Bogle, joint-stock company, Long Term Capital Management, loss aversion, machine readable, market bubble, mental accounting, Money creation, Myron Scholes, new economy, oil shock, passive investing, Paul Samuelson, popular capitalism, prediction markets, price anchoring, price stability, proprietary trading, purchasing power parity, random walk, Richard Thaler, risk free rate, risk tolerance, risk/return, Robert Shiller, Ronald Reagan, shareholder value, short selling, South Sea Bubble, stock buybacks, stocks for the long run, subprime mortgage crisis, survivorship bias, technology bubble, The Great Moderation, The Wisdom of Crowds, transaction costs, tulip mania, uptick rule, Vanguard fund, vertical integration

Gerard, “A Study of Normative and Informational Social Influences upon Individual Judgment,” Journal of Abnormal and Social Psychology, vol. 51 (1955), pp. 629–636. 8 Charles Mackay, Memoirs of Extraordinary Popular Delusions and the Madness of Crowd, London: Bentley, 1841. 9 See James Surowiecki, The Wisdom of Crowds, New York: Anchor Books, 2005. CHAPTER 19 Behavioral Finance and the Psychology of Investing 325 Dave, have you ever been in a new town and found yourself choosing between two restaurants? One perfectly rational way of deciding, if they are close in distance, is to see which restaurant is busier since there’s a good chance that at least some of those patrons have tried both restaurants and have chosen to eat at the better one.


pages: 515 words: 126,820

Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World by Don Tapscott, Alex Tapscott

"World Economic Forum" Davos, Airbnb, altcoin, Alvin Toffler, asset-backed security, autonomous vehicles, barriers to entry, behavioural economics, bitcoin, Bitcoin Ponzi scheme, blockchain, Blythe Masters, Bretton Woods, business logic, business process, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, carbon credits, carbon footprint, clean water, cloud computing, cognitive dissonance, commoditize, commons-based peer production, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, crowdsourcing, cryptocurrency, currency risk, decentralized internet, digital capitalism, disintermediation, disruptive innovation, distributed ledger, do well by doing good, Donald Trump, double entry bookkeeping, driverless car, Edward Snowden, Elon Musk, Erik Brynjolfsson, Ethereum, ethereum blockchain, failed state, fiat currency, financial innovation, Firefox, first square of the chessboard, first square of the chessboard / second half of the chessboard, future of work, Future Shock, Galaxy Zoo, general purpose technology, George Gilder, glass ceiling, Google bus, GPS: selective availability, Hacker News, Hernando de Soto, Higgs boson, holacracy, income inequality, independent contractor, informal economy, information asymmetry, information security, intangible asset, interest rate swap, Internet of things, Jeff Bezos, jimmy wales, Kickstarter, knowledge worker, Kodak vs Instagram, Lean Startup, litecoin, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, means of production, microcredit, mobile money, money market fund, Neal Stephenson, Network effects, new economy, Oculus Rift, off grid, pattern recognition, peer-to-peer, peer-to-peer lending, peer-to-peer model, performance metric, Peter Thiel, planetary scale, Ponzi scheme, prediction markets, price mechanism, Productivity paradox, QR code, quantitative easing, radical decentralization, ransomware, Ray Kurzweil, renewable energy credits, rent-seeking, ride hailing / ride sharing, Ronald Coase, Ronald Reagan, Salesforce, Satoshi Nakamoto, search costs, Second Machine Age, seigniorage, self-driving car, sharing economy, Silicon Valley, Skype, smart contracts, smart grid, Snow Crash, social graph, social intelligence, social software, standardized shipping container, Stephen Hawking, Steve Jobs, Steve Wozniak, Stewart Brand, supply-chain management, systems thinking, TaskRabbit, TED Talk, The Fortune at the Bottom of the Pyramid, The Nature of the Firm, The Soul of a New Machine, The Wisdom of Crowds, transaction costs, Turing complete, Turing test, Tyler Cowen, Uber and Lyft, uber lyft, unbanked and underbanked, underbanked, unorthodox policies, vertical integration, Vitalik Buterin, wealth creators, X Prize, Y2K, Yochai Benkler, Zipcar

Interview with Erik Voorhees, June 16, 2015. 78. www.sec.gov/about/laws/sa33.pdf. 79. http://www.wired.com/2015/12/sec-approves-plan-to-issue-company-stock-via-the-bitcoin-blockchain/. 80. http://investors.overstock.com/mobile.view?c=131091&v=203&d=1&id=2073583. 81. https://bitcoinmagazine.com/21007/nasdaq-selects-bitcoin-startup-chain-run-pilot-private-market-arm/. 82. James Surowiecki, The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations (New York: Doubleday, 2014). 83. www.augur.net. 84. From e-mail exchange with the Augur team: Jack Peterson, Core Developer; Joey Krug, Core Developer; Peronet Despeignes, SpecialOps. 85.


pages: 487 words: 132,252

The Fry Chronicles: An Autobiography by Stephen Fry

Alistair Cooke, back-to-the-land, Desert Island Discs, Etonian, gentrification, Isaac Newton, Live Aid, loadsamoney, pre–internet, Ronald Reagan, Saturday Night Live, Sloane Ranger, South China Sea, Stephen Fry, The Wisdom of Crowds, University of East Anglia, Winter of Discontent

This inconvenient truth extends to those on whom we lavish our patronizing pity too. If the social-networking services of the digital age teach us anything it is that only a fool would underestimate the intelligence, intuition and cognitive skills of the ‘masses’. I am talking about more than the ‘wisdom of crowds’ here. If you look beyond sillinesses like the puzzling inability of the majority to distinguish between your and you’re, its and it’s and there, they’re and their (all of which distinctions have nothing to do with language, only with grammar and orthographical convention: after all logic and consistency would suggest the insertion of a genitival apostrophe in the pronominal possessive its, but convention has decided, perhaps to avoid confusion with the elided it is, to dispense with one), if, as I say, you look beyond such pernickety pedantries, you will see that it is possible to be a fan of reality TV, talent shows and bubblegum pop and still have a brain.


pages: 503 words: 131,064

Liars and Outliers: How Security Holds Society Together by Bruce Schneier

Abraham Maslow, airport security, Alvin Toffler, barriers to entry, behavioural economics, benefit corporation, Berlin Wall, Bernie Madoff, Bernie Sanders, Brian Krebs, Broken windows theory, carried interest, Cass Sunstein, Chelsea Manning, commoditize, corporate governance, crack epidemic, credit crunch, CRISPR, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Graeber, desegregation, don't be evil, Double Irish / Dutch Sandwich, Douglas Hofstadter, Dunbar number, experimental economics, Fall of the Berlin Wall, financial deregulation, Future Shock, Garrett Hardin, George Akerlof, hydraulic fracturing, impulse control, income inequality, information security, invention of agriculture, invention of gunpowder, iterative process, Jean Tirole, John Bogle, John Nash: game theory, joint-stock company, Julian Assange, language acquisition, longitudinal study, mass incarceration, meta-analysis, microcredit, mirror neurons, moral hazard, Multics, mutually assured destruction, Nate Silver, Network effects, Nick Leeson, off-the-grid, offshore financial centre, Oklahoma City bombing, patent troll, phenotype, pre–internet, principal–agent problem, prisoner's dilemma, profit maximization, profit motive, race to the bottom, Ralph Waldo Emerson, RAND corporation, Recombinant DNA, rent-seeking, RFID, Richard Thaler, risk tolerance, Ronald Coase, security theater, shareholder value, slashdot, statistical model, Steven Pinker, Stuxnet, technological singularity, The Market for Lemons, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Timothy McVeigh, too big to fail, traffic fines, Tragedy of the Commons, transaction costs, ultimatum game, UNCLOS, union organizing, Vernor Vinge, WikiLeaks, World Values Survey, Y2K, Yochai Benkler, zero-sum game

Beaman, Bonnel Kentz, Edward Diener, and Soren Svanum (1979), “Self-Awareness and Transgression in Children: Two Field Studies,” Journal of Personality & Social Psychology, 37:1835–46. There's a great word Oliver Conway (22 Jun 2004), “Congo Word ‘Most Untranslatable,'” BBC News. Quakers would cooperate Adrian Cadbury (2003), “Beliefs and Business: The Experience of Quaker Companies,” The Foundation of Lady Katherine Leveson. James Surowiecki (2004), The Wisdom of Crowds, Anchor. Steven Davison (2011), “The Double-Culture Period: Factors in Quaker Success,” unpublished manuscript. Maghribi traders Avner Greif (2008), “Contract Enforcement and Institutions among the Maghribi Traders: Refuting Edwards and Ogilvie,” SIEPR Discussion Paper 08–018, Stanford Institute for Economic Policy Research.


pages: 418 words: 128,965

The Master Switch: The Rise and Fall of Information Empires by Tim Wu

accounting loophole / creative accounting, Alfred Russel Wallace, Andy Rubin, AOL-Time Warner, Apple II, barriers to entry, British Empire, Burning Man, business cycle, Cass Sunstein, Clayton Christensen, commoditize, corporate raider, creative destruction, disinformation, disruptive innovation, don't be evil, Douglas Engelbart, Douglas Engelbart, Eben Moglen, Ford Model T, Howard Rheingold, Hush-A-Phone, informal economy, intermodal, Internet Archive, invention of movable type, invention of the telephone, invisible hand, Jane Jacobs, John Markoff, Joseph Schumpeter, Menlo Park, open economy, packet switching, PageRank, profit motive, radical decentralization, road to serfdom, Robert Bork, Robert Metcalfe, Ronald Coase, scientific management, search costs, seminal paper, sexual politics, shareholder value, Silicon Valley, Skype, Steve Jobs, Steve Wozniak, Telecommunications Act of 1996, The Chicago School, The Death and Life of Great American Cities, the long tail, the market place, The Wisdom of Crowds, too big to fail, Upton Sinclair, urban planning, vertical integration, Yochai Benkler, zero-sum game

The institution of the festival—once the only exhibition chance for the potential art-house film, of which many were made but few were chosen—slowly evolved into something of a filter or wholesale market. Firms like Miramax, and its imitators like Sony Film Classics and Fine Line, began to see that by buying low and selling high, exposure to independent film could be profitable again. There is a certain genius to the approach, which might be said to depend on the wisdom of crowds over the judgment of a single producer. Given the quarry, there may be no other realistic way of hunting for it: nearly ten thousand independent films are produced in the United States every year, and thousands more are made abroad. As with any other commodity, most are average or below average, but some will be brilliant; among that smaller cohort, an even smaller portion will have potential for popularity with the public.


pages: 461 words: 128,421

The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street by Justin Fox

"Friedman doctrine" OR "shareholder theory", Abraham Wald, activist fund / activist shareholder / activist investor, Alan Greenspan, Albert Einstein, Andrei Shleifer, AOL-Time Warner, asset allocation, asset-backed security, bank run, beat the dealer, behavioural economics, Benoit Mandelbrot, Big Tech, Black Monday: stock market crash in 1987, Black-Scholes formula, book value, Bretton Woods, Brownian motion, business cycle, buy and hold, capital asset pricing model, card file, Carl Icahn, Cass Sunstein, collateralized debt obligation, compensation consultant, complexity theory, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, democratizing finance, Dennis Tito, discovery of the americas, diversification, diversified portfolio, Dr. Strangelove, Edward Glaeser, Edward Thorp, endowment effect, equity risk premium, Eugene Fama: efficient market hypothesis, experimental economics, financial innovation, Financial Instability Hypothesis, fixed income, floating exchange rates, George Akerlof, Glass-Steagall Act, Henri Poincaré, Hyman Minsky, implied volatility, impulse control, index arbitrage, index card, index fund, information asymmetry, invisible hand, Isaac Newton, John Bogle, John Meriwether, John Nash: game theory, John von Neumann, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Arrow, libertarian paternalism, linear programming, Long Term Capital Management, Louis Bachelier, low interest rates, mandelbrot fractal, market bubble, market design, Michael Milken, Myron Scholes, New Journalism, Nikolai Kondratiev, Paul Lévy, Paul Samuelson, pension reform, performance metric, Ponzi scheme, power law, prediction markets, proprietary trading, prudent man rule, pushing on a string, quantitative trading / quantitative finance, Ralph Nader, RAND corporation, random walk, Richard Thaler, risk/return, road to serfdom, Robert Bork, Robert Shiller, rolodex, Ronald Reagan, seminal paper, shareholder value, Sharpe ratio, short selling, side project, Silicon Valley, Skinner box, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, statistical model, stocks for the long run, tech worker, The Chicago School, The Myth of the Rational Market, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, Thorstein Veblen, Tobin tax, transaction costs, tulip mania, Two Sigma, Tyler Cowen, value at risk, Vanguard fund, Vilfredo Pareto, volatility smile, Yogi Berra

It is when we get away from investing and start considering those affected by financial markets that broader questions of market efficiency come into play. It’s not just whether one can beat the market, but whether one can rely on the prices prevailing on financial markets to be right. A popular concept in recent years has been the “wisdom of crowds”—the notion that groups can often make better-informed decisions than individuals. It’s a valid enough idea, and the title of an excellent book by James Surowiecki, but the wording is misleading. Crowds—and markets—possess many useful traits. Wisdom is not one of them. It is as Henri Poincaré wrote a century ago: When men are brought together, they no longer decide by chance and independently of each other, but react upon one another.


pages: 517 words: 139,477

Stocks for the Long Run 5/E: the Definitive Guide to Financial Market Returns & Long-Term Investment Strategies by Jeremy Siegel

Alan Greenspan, AOL-Time Warner, Asian financial crisis, asset allocation, backtesting, banking crisis, Bear Stearns, behavioural economics, Black Monday: stock market crash in 1987, Black-Scholes formula, book value, break the buck, Bretton Woods, business cycle, buy and hold, buy low sell high, California gold rush, capital asset pricing model, carried interest, central bank independence, cognitive dissonance, compound rate of return, computer age, computerized trading, corporate governance, correlation coefficient, Credit Default Swap, currency risk, Daniel Kahneman / Amos Tversky, Deng Xiaoping, discounted cash flows, diversification, diversified portfolio, dividend-yielding stocks, dogs of the Dow, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, eurozone crisis, Everybody Ought to Be Rich, Financial Instability Hypothesis, fixed income, Flash crash, forward guidance, fundamental attribution error, Glass-Steagall Act, housing crisis, Hyman Minsky, implied volatility, income inequality, index arbitrage, index fund, indoor plumbing, inflation targeting, invention of the printing press, Isaac Newton, it's over 9,000, John Bogle, joint-stock company, London Interbank Offered Rate, Long Term Capital Management, loss aversion, machine readable, market bubble, mental accounting, Minsky moment, Money creation, money market fund, mortgage debt, Myron Scholes, new economy, Northern Rock, oil shock, passive investing, Paul Samuelson, Peter Thiel, Ponzi scheme, prediction markets, price anchoring, price stability, proprietary trading, purchasing power parity, quantitative easing, random walk, Richard Thaler, risk free rate, risk tolerance, risk/return, Robert Gordon, Robert Shiller, Ronald Reagan, shareholder value, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, stocks for the long run, survivorship bias, technology bubble, The Great Moderation, the payments system, The Wisdom of Crowds, transaction costs, tulip mania, Tyler Cowen, Tyler Cowen: Great Stagnation, uptick rule, Vanguard fund

Gerard, “A Study of Normative and Informational Social Influences upon Individual Judgment,” Journal of Abnormal and Social Psychology, vol. 51 (1955), pp. 629-636. 8. Charles Mackay, Memoirs of Extraordinary Popular Delusions and the Madness of Crowds, London: Bentley, 1841. 9. See James Surowiecki, The Wisdom of Crowds, New York: Anchor Books, 2005. 10. Robert Shiller, “Conversation, Information, and Herd Behavior,” American Economic Review, vol. 85, no. 2 (1995), pp. 181-185; S. D. Bikhchandani, David Hirshleifer, and Ivo Welch, “A Theory of Fashion, Social Custom and Cultural Change,” Journal of Political Economy, vol. 81 (1992), pp. 637-654; and Abhijit V.


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Crisis Economics: A Crash Course in the Future of Finance by Nouriel Roubini, Stephen Mihm

Alan Greenspan, Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, barriers to entry, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, bond market vigilante , bonus culture, Bretton Woods, BRICs, British Empire, business cycle, call centre, capital controls, Carmen Reinhart, central bank independence, centralized clearinghouse, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, dark matter, David Ricardo: comparative advantage, debt deflation, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, fiat currency, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, financial intermediation, full employment, George Akerlof, Glass-Steagall Act, global pandemic, global reserve currency, Gordon Gekko, Greenspan put, Growth in a Time of Debt, housing crisis, Hyman Minsky, information asymmetry, interest rate swap, invisible hand, Joseph Schumpeter, junk bonds, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, Louis Bachelier, low interest rates, margin call, market bubble, market fundamentalism, Martin Wolf, means of production, Minsky moment, money market fund, moral hazard, mortgage debt, mortgage tax deduction, new economy, Northern Rock, offshore financial centre, oil shock, Paradox of Choice, paradox of thrift, Paul Samuelson, Ponzi scheme, price stability, principal–agent problem, private sector deleveraging, proprietary trading, pushing on a string, quantitative easing, quantitative trading / quantitative finance, race to the bottom, random walk, regulatory arbitrage, reserve currency, risk tolerance, Robert Shiller, Satyajit Das, Savings and loan crisis, savings glut, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, subprime mortgage crisis, Suez crisis 1956, The Great Moderation, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, too big to fail, tulip mania, Tyler Cowen, unorthodox policies, value at risk, We are all Keynesians now, Works Progress Administration, yield curve, Yom Kippur War

On the eve of the crash that inaugurated the Great Depression, Princeton economist Joseph Lawrence confidently declared, “The consensus of judgment of the millions whose valuations function on that admirable market, the Stock Exchange, is that stocks are not at present overvalued.” Lawrence evidently believed in the wisdom of crowds, challenging anyone to “veto the judgment of this intelligent multitude.” In theory, the Great Depression should have put an end to this sort of nonsense, but postwar academic departments of economics and finance breathed new life into the old fallacy. Much of the credit—if that’s the word—goes to the economics department at the University of Chicago.


pages: 470 words: 128,328

Reality Is Broken: Why Games Make Us Better and How They Can Change the World by Jane McGonigal

Abraham Maslow, airport security, Albert Einstein, Amazon Mechanical Turk, Anthropocene, citizen journalism, clean water, collaborative economy, crowdsourcing, delayed gratification, en.wikipedia.org, fear of failure, G4S, game design, hedonic treadmill, hobby farmer, Ian Bogost, jimmy wales, mass immigration, Merlin Mann, Network effects, new economy, oil shock, peak oil, planetary scale, Ralph Waldo Emerson, Richard Stallman, science of happiness, Search for Extraterrestrial Intelligence, SETI@home, Silicon Valley, SimCity, smart meter, Stewart Brand, The Wisdom of Crowds, Tony Hsieh, Tragedy of the Commons, urban planning, We are as Gods, web application, Whole Earth Catalog

“No one today has a clear picture of oil availability or what will happen when demand inevitably outstrips supply,” Eklund wrote in his proposal. “That will largely depend on how well ordinary people respond to the crisis. Until now, no one has ever thought to ask them what they might do. WWO will evoke the wisdom of crowds in advance, as players work together to gain grassroots insights into the forces that will rule at street level in a crisis—and figure out the best ways to prepare, cooperate, and collectively create solutions if and when a real peak-oil shortage happens.” It was designed as a massively multiplayer thought experiment: players would spend six weeks imagining how such a crisis might play out in their local communities, their industries, and their own lives.


pages: 642 words: 141,888

Like, Comment, Subscribe: Inside YouTube's Chaotic Rise to World Domination by Mark Bergen

23andMe, 4chan, An Inconvenient Truth, Andy Rubin, Anne Wojcicki, Big Tech, Black Lives Matter, book scanning, Burning Man, business logic, call centre, Cambridge Analytica, citizen journalism, cloud computing, Columbine, company town, computer vision, coronavirus, COVID-19, crisis actor, crowdsourcing, cryptocurrency, data science, David Graeber, DeepMind, digital map, disinformation, don't be evil, Donald Trump, Edward Snowden, Elon Musk, fake news, false flag, game design, gender pay gap, George Floyd, gig economy, global pandemic, Golden age of television, Google Glasses, Google X / Alphabet X, Googley, growth hacking, Haight Ashbury, immigration reform, James Bridle, John Perry Barlow, Justin.tv, Kevin Roose, Khan Academy, Kinder Surprise, Marc Andreessen, Marc Benioff, Mark Zuckerberg, mass immigration, Max Levchin, Menlo Park, Minecraft, mirror neurons, moral panic, move fast and break things, non-fungible token, PalmPilot, paypal mafia, Peter Thiel, Ponzi scheme, QAnon, race to the bottom, recommendation engine, Rubik’s Cube, Salesforce, Saturday Night Live, self-driving car, Sheryl Sandberg, side hustle, side project, Silicon Valley, slashdot, Snapchat, social distancing, Social Justice Warrior, speech recognition, Stanford marshmallow experiment, Steve Bannon, Steve Jobs, Steven Levy, surveillance capitalism, Susan Wojcicki, systems thinking, tech bro, the long tail, The Wisdom of Crowds, TikTok, Walter Mischel, WikiLeaks, work culture

And she quickly learned to adapt to the founders’ nerd-comic sensibilities, writing jokes about how many pizzas a group of programmers could consume. TGIF’s grandest invention was Dory, a computer system (named after the Pixar character) for submitting audience questions and voting on them. Those with the most votes were asked. Dory reflected Google’s deepest held beliefs in data, efficiency, the wisdom of crowds. Dory felt like how a true democracy should feel and, for many there, quite different from what it felt like under George W. Bush. Google’s leaders openly chafed at Bush’s Patriot Act and began flaunting the company’s liberal California bona fides more often. The summer Stapleton joined, Google made the largest-ever corporate purchase of solar panels for its campus.


pages: 636 words: 140,406

The Case Against Education: Why the Education System Is a Waste of Time and Money by Bryan Caplan

affirmative action, Affordable Care Act / Obamacare, assortative mating, behavioural economics, conceptual framework, correlation does not imply causation, deliberate practice, deskilling, disruptive innovation, do what you love, driverless car, en.wikipedia.org, endogenous growth, experimental subject, fear of failure, Flynn Effect, future of work, George Akerlof, ghettoisation, hive mind, job satisfaction, Kenneth Arrow, Khan Academy, labor-force participation, longitudinal study, low interest rates, low skilled workers, market bubble, mass incarceration, meta-analysis, Peter Thiel, price discrimination, profit maximization, publication bias, risk tolerance, Robert Gordon, Ronald Coase, school choice, selection bias, Silicon Valley, statistical model, Steven Pinker, The Bell Curve by Richard Herrnstein and Charles Murray, the scientific method, The Wisdom of Crowds, trickle-down economics, twin studies, Tyler Cowen, unpaid internship, upwardly mobile, women in the workforce, yield curve, zero-sum game

Only one person has accepted—and the offer’s still on the table. The Politics of Social Desirability Bias Americans relentlessly gripe about schools and colleges, but virtually no one wants to cut spending on education. If education is as wasteful as I claim, why is it universally popular? The “Wisdom of Crowds” is fallible, but are we really supposed to believe billions of people from every major culture have converged on a common error? That’s quite a bullet to bite. When you chew this bullet, however, it melts in your mouth. Collective folly is inherently plausible. Weigh the intellectual payoffs.


pages: 495 words: 144,101

Goddess of the Market: Ayn Rand and the American Right by Jennifer Burns

Abraham Maslow, Alan Greenspan, Alvin Toffler, anti-communist, Apollo 11, bank run, barriers to entry, centralized clearinghouse, collective bargaining, creative destruction, desegregation, feminist movement, financial independence, gentleman farmer, George Gilder, Herbert Marcuse, invisible hand, jimmy wales, Joan Didion, John Markoff, Joseph Schumpeter, knowledge worker, laissez-faire capitalism, Lewis Mumford, lone genius, Menlo Park, minimum wage unemployment, Mont Pelerin Society, new economy, Norman Mailer, offshore financial centre, Ponzi scheme, profit motive, public intellectual, RAND corporation, rent control, road to serfdom, Robert Bork, rolodex, Ronald Reagan, side project, Stewart Brand, The Chicago School, The Wisdom of Crowds, union organizing, urban renewal, We are as Gods, white flight, Whole Earth Catalog

A nonprofit that depends on charitable donations, Wikipedia may ultimately put its rival encyclopedias out of business. At the root of Wikipedia are warring sensibilities that seem to both embody and defy Rand’s beliefs. The website’s emphasis on individual empowerment, the value of knowledge, and its own risky organizational model reflects Rand’s sensibility. But its trust in the wisdom of crowds, celebration of the social nature of knowledge, and faith that many working together will produce something of enduring value contradict Rand’s adage “All creation is individual.” Similar contradictions undergird the response to Rand of Craig Newmark, the founder of the online advertising site Craigslist.


pages: 565 words: 151,129

The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism by Jeremy Rifkin

3D printing, active measures, additive manufacturing, Airbnb, autonomous vehicles, back-to-the-land, benefit corporation, big-box store, bike sharing, bioinformatics, bitcoin, business logic, business process, Chris Urmson, circular economy, clean tech, clean water, cloud computing, collaborative consumption, collaborative economy, commons-based peer production, Community Supported Agriculture, Computer Numeric Control, computer vision, crowdsourcing, demographic transition, distributed generation, DIY culture, driverless car, Eben Moglen, electricity market, en.wikipedia.org, Frederick Winslow Taylor, Free Software Foundation, Garrett Hardin, general purpose technology, global supply chain, global village, Hacker Conference 1984, Hacker Ethic, industrial robot, informal economy, information security, Intergovernmental Panel on Climate Change (IPCC), intermodal, Internet of things, invisible hand, Isaac Newton, James Watt: steam engine, job automation, John Elkington, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Julian Assange, Kickstarter, knowledge worker, longitudinal study, low interest rates, machine translation, Mahatma Gandhi, manufacturing employment, Mark Zuckerberg, market design, mass immigration, means of production, meta-analysis, Michael Milken, mirror neurons, natural language processing, new economy, New Urbanism, nuclear winter, Occupy movement, off grid, off-the-grid, oil shale / tar sands, pattern recognition, peer-to-peer, peer-to-peer lending, personalized medicine, phenotype, planetary scale, price discrimination, profit motive, QR code, RAND corporation, randomized controlled trial, Ray Kurzweil, rewilding, RFID, Richard Stallman, risk/return, Robert Solow, Rochdale Principles, Ronald Coase, scientific management, search inside the book, self-driving car, shareholder value, sharing economy, Silicon Valley, Skype, smart cities, smart grid, smart meter, social web, software as a service, spectrum auction, Steve Jobs, Stewart Brand, the built environment, the Cathedral and the Bazaar, the long tail, The Nature of the Firm, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, too big to fail, Tragedy of the Commons, transaction costs, urban planning, vertical integration, warehouse automation, Watson beat the top human players on Jeopardy!, web application, Whole Earth Catalog, Whole Earth Review, WikiLeaks, working poor, Yochai Benkler, zero-sum game, Zipcar

New York: Penguin Group, 2012. Stover, John F. American Railroads. Chicago: University of Chicago Press, 1961. Suárez-Orozco, Marcelo, ed. Learning in the Global Era: International Perspectives on Globalization and Education. Berkeley: University of California Press, 2007. Surowiecki, James. The Wisdom of Crowds. New York: Doubleday, 2004. Tapscott, Don and Anthony Williams. MacroWikinomics: Rebooting Business and the World. New York: Portfolio Penguin, 2010. Tawney, R. H. Religion and the Rise of Capitalism. New Brunswick, NJ: Transaction, 2011. ———. The Acquisitive Society. New York: Harcourt, Brace & Co., 1920.


pages: 524 words: 155,947

More: The 10,000-Year Rise of the World Economy by Philip Coggan

accounting loophole / creative accounting, Ada Lovelace, agricultural Revolution, Airbnb, airline deregulation, Alan Greenspan, Andrei Shleifer, anti-communist, Apollo 11, assortative mating, autonomous vehicles, bank run, banking crisis, banks create money, basic income, Bear Stearns, Berlin Wall, Black Monday: stock market crash in 1987, Bletchley Park, Bob Noyce, Boeing 747, bond market vigilante , Branko Milanovic, Bretton Woods, Brexit referendum, British Empire, business cycle, call centre, capital controls, carbon footprint, carbon tax, Carl Icahn, Carmen Reinhart, Celtic Tiger, central bank independence, Charles Babbage, Charles Lindbergh, clean water, collective bargaining, Columbian Exchange, Columbine, Corn Laws, cotton gin, credit crunch, Credit Default Swap, crony capitalism, cross-border payments, currency peg, currency risk, debt deflation, DeepMind, Deng Xiaoping, discovery of the americas, Donald Trump, driverless car, Easter island, Erik Brynjolfsson, European colonialism, eurozone crisis, Fairchild Semiconductor, falling living standards, financial engineering, financial innovation, financial intermediation, floating exchange rates, flying shuttle, Ford Model T, Fractional reserve banking, Frederick Winslow Taylor, full employment, general purpose technology, germ theory of disease, German hyperinflation, gig economy, Gini coefficient, Glass-Steagall Act, global supply chain, global value chain, Gordon Gekko, Great Leap Forward, greed is good, Greenspan put, guns versus butter model, Haber-Bosch Process, Hans Rosling, Hernando de Soto, hydraulic fracturing, hydroponic farming, Ignaz Semmelweis: hand washing, income inequality, income per capita, independent contractor, indoor plumbing, industrial robot, inflation targeting, Isaac Newton, James Watt: steam engine, job automation, John Snow's cholera map, joint-stock company, joint-stock limited liability company, Jon Ronson, Kenneth Arrow, Kula ring, labour market flexibility, land reform, land tenure, Lao Tzu, large denomination, Les Trente Glorieuses, liquidity trap, Long Term Capital Management, Louis Blériot, low cost airline, low interest rates, low skilled workers, lump of labour, M-Pesa, Malcom McLean invented shipping containers, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Martin Wolf, McJob, means of production, Mikhail Gorbachev, mittelstand, Modern Monetary Theory, moral hazard, Murano, Venice glass, Myron Scholes, Nelson Mandela, Network effects, Northern Rock, oil shale / tar sands, oil shock, Paul Samuelson, Paul Volcker talking about ATMs, Phillips curve, popular capitalism, popular electronics, price stability, principal–agent problem, profit maximization, purchasing power parity, quantitative easing, railway mania, Ralph Nader, regulatory arbitrage, road to serfdom, Robert Gordon, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, savings glut, scientific management, Scramble for Africa, Second Machine Age, secular stagnation, Silicon Valley, Simon Kuznets, South China Sea, South Sea Bubble, special drawing rights, spice trade, spinning jenny, Steven Pinker, Suez canal 1869, TaskRabbit, techlash, Thales and the olive presses, Thales of Miletus, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, Tragedy of the Commons, transaction costs, transatlantic slave trade, transcontinental railway, Triangle Shirtwaist Factory, universal basic income, Unsafe at Any Speed, Upton Sinclair, V2 rocket, Veblen good, War on Poverty, Washington Consensus, Watson beat the top human players on Jeopardy!, women in the workforce, world market for maybe five computers, Yom Kippur War, you are the product, zero-sum game

A combination of overconfidence and pride meant that the powers were “sleepwalkers” heading to war.4 Europe’s leaders may have been deceived by the speedy outcomes to mid-19th century wars between Prussia and Austria, and Prussia and France. The appropriate precedent, however, was the US Civil War, which dragged on for four years despite the economic and military advantages enjoyed by the northern side. Stock markets are supposed to be guided by the “wisdom of crowds”, as investors use their judgement to assess the outlook. But as the historian Niall Ferguson has pointed out, the markets barely reacted to the assassination of the Austrian Archduke Franz Ferdinand on June 28th 1914 – the event that sparked the drive to war. It was not until July 21st that investors began to respond, as the Austrians made threatening noises towards Serbia, whose agents were deemed to be behind the assassination.


pages: 542 words: 145,022

In Pursuit of the Perfect Portfolio: The Stories, Voices, and Key Insights of the Pioneers Who Shaped the Way We Invest by Andrew W. Lo, Stephen R. Foerster

Alan Greenspan, Albert Einstein, AOL-Time Warner, asset allocation, backtesting, behavioural economics, Benoit Mandelbrot, Black Monday: stock market crash in 1987, Black-Scholes formula, Bretton Woods, Brownian motion, business cycle, buy and hold, capital asset pricing model, Charles Babbage, Charles Lindbergh, compound rate of return, corporate governance, COVID-19, credit crunch, currency risk, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, Donald Trump, Edward Glaeser, equity premium, equity risk premium, estate planning, Eugene Fama: efficient market hypothesis, fake news, family office, fear index, fiat currency, financial engineering, financial innovation, financial intermediation, fixed income, hiring and firing, Hyman Minsky, implied volatility, index fund, interest rate swap, Internet Archive, invention of the wheel, Isaac Newton, Jim Simons, John Bogle, John Meriwether, John von Neumann, joint-stock company, junk bonds, Kenneth Arrow, linear programming, Long Term Capital Management, loss aversion, Louis Bachelier, low interest rates, managed futures, mandelbrot fractal, margin call, market bubble, market clearing, mental accounting, money market fund, money: store of value / unit of account / medium of exchange, Myron Scholes, new economy, New Journalism, Own Your Own Home, passive investing, Paul Samuelson, Performance of Mutual Funds in the Period, prediction markets, price stability, profit maximization, quantitative trading / quantitative finance, RAND corporation, random walk, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Solow, Ronald Reagan, Savings and loan crisis, selection bias, seminal paper, shareholder value, Sharpe ratio, short selling, South Sea Bubble, stochastic process, stocks for the long run, survivorship bias, tail risk, Thales and the olive presses, Thales of Miletus, The Myth of the Rational Market, The Wisdom of Crowds, Thomas Bayes, time value of money, transaction costs, transfer pricing, tulip mania, Vanguard fund, yield curve, zero-coupon bond, zero-sum game

And so, you need to look at the prices and how the market is telling us information. So, derivative markets are telling us information. The spot markets are telling us information. The forward markets and other ways are telling us huge amounts of information. And, I think, it’s better to use the consensus or the wisdom of crowds, millions of people making decisions.” Having helped create modern derivative markets, Scholes now wants investors to listen to those markets in order to form the Perfect Portfolio, thus coming full circle. 7 Robert Merton, from Derivatives to Retirement IMAGINE BEING the son of Robert K.


pages: 552 words: 168,518

MacroWikinomics: Rebooting Business and the World by Don Tapscott, Anthony D. Williams

"World Economic Forum" Davos, accounting loophole / creative accounting, airport security, Andrew Keen, augmented reality, Ayatollah Khomeini, barriers to entry, Ben Horowitz, bioinformatics, blood diamond, Bretton Woods, business climate, business process, buy and hold, car-free, carbon footprint, carbon tax, Charles Lindbergh, citizen journalism, Clayton Christensen, clean water, Climategate, Climatic Research Unit, cloud computing, collaborative editing, collapse of Lehman Brothers, collateralized debt obligation, colonial rule, commoditize, corporate governance, corporate social responsibility, creative destruction, crowdsourcing, death of newspapers, demographic transition, digital capitalism, digital divide, disruptive innovation, distributed generation, do well by doing good, don't be evil, en.wikipedia.org, energy security, energy transition, Evgeny Morozov, Exxon Valdez, failed state, fault tolerance, financial innovation, Galaxy Zoo, game design, global village, Google Earth, Hans Rosling, hive mind, Home mortgage interest deduction, information asymmetry, interchangeable parts, Internet of things, invention of movable type, Isaac Newton, James Watt: steam engine, Jaron Lanier, jimmy wales, Joseph Schumpeter, Julian Assange, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, machine readable, Marc Andreessen, Marshall McLuhan, mass immigration, medical bankruptcy, megacity, military-industrial complex, mortgage tax deduction, Netflix Prize, new economy, Nicholas Carr, ocean acidification, off-the-grid, oil shock, old-boy network, online collectivism, open borders, open economy, pattern recognition, peer-to-peer lending, personalized medicine, radical decentralization, Ray Kurzweil, RFID, ride hailing / ride sharing, Ronald Reagan, Rubik’s Cube, scientific mainstream, shareholder value, Silicon Valley, Skype, smart grid, smart meter, social graph, social web, software patent, Steve Jobs, synthetic biology, systems thinking, text mining, the long tail, the scientific method, The Wisdom of Crowds, transaction costs, transfer pricing, University of East Anglia, urban sprawl, value at risk, WikiLeaks, X Prize, Yochai Benkler, young professional, Zipcar

According to iCarpool’s founder, Lakshmi Krishnamurthy, the community support and feedback benefited iCarpool even more than the cash and the promotion: “The potential to tap into a fast growing diverse community of founders, funders, and technology and business experts—to be able to discuss ideas and exchange feedback—is amazing,” she says. “I believe community capital has a bright future. VenCorps is the American Idol for entrepreneurs.” By creating this virtual economy, an ad hoc meritocracy if you will, VenCorps harnesses its community of passionate participants, to leverage both the wisdom of crowds and the production capability of the masses. This duality is at the heart of wikinomics. The new collaboration is not just about the community picking the winners; it is also about the community building the winners together. Was the winner iCarpool.com the best choice? Did it have the best technology and solution?


pages: 834 words: 180,700

The Architecture of Open Source Applications by Amy Brown, Greg Wilson

8-hour work day, anti-pattern, bioinformatics, business logic, c2.com, cloud computing, cognitive load, collaborative editing, combinatorial explosion, computer vision, continuous integration, Conway's law, create, read, update, delete, David Heinemeier Hansson, Debian, domain-specific language, Donald Knuth, en.wikipedia.org, fault tolerance, finite state, Firefox, Free Software Foundation, friendly fire, functional programming, Guido van Rossum, Ken Thompson, linked data, load shedding, locality of reference, loose coupling, Mars Rover, MITM: man-in-the-middle, MVC pattern, One Laptop per Child (OLPC), peer-to-peer, Perl 6, premature optimization, recommendation engine, revision control, Ruby on Rails, side project, Skype, slashdot, social web, speech recognition, the scientific method, The Wisdom of Crowds, web application, WebSocket

Eclipse has so many consumers with diverse use cases and our expansive API became difficult for new consumers to adopt and understand. In retrospect, we should have kept our API simpler. If 80% of consumers only use 20% of the API, there is a need for simplification which was one of the reasons that the Eclipse 4.x stream was created. The wisdom of crowds does reveal interesting use cases, such as disaggregating the IDE into bundles that could be used to construct RCP applications. Conversely, crowds often generate a lot of noise with requests for edge case scenarios that take a significant amount of time to implement. In the early days of the Eclipse project, committers had the luxury of dedicating significant amounts of time to documentation, examples and answering community questions.


pages: 631 words: 177,227

The Secret of Our Success: How Culture Is Driving Human Evolution, Domesticating Our Species, and Making Us Smarter by Joseph Henrich

agricultural Revolution, capital asset pricing model, Climategate, cognitive bias, Daniel Kahneman / Amos Tversky, delayed gratification, demographic transition, disinformation, endowment effect, experimental economics, experimental subject, Flynn Effect, impulse control, language acquisition, Monkeys Reject Unequal Pay, Nash equilibrium, nocebo, out of africa, phenotype, placebo effect, profit maximization, randomized controlled trial, risk tolerance, side project, social intelligence, social web, Steven Pinker, sugar pill, sunk-cost fallacy, The Wisdom of Crowds, theory of mind, ultimatum game

However, individual experiences will vary, so suppose that long experience alone leads to only a 50% chance of an angler converging on the blood knot, a 30% chance of using the fisherman’s knot, and a 20% chance of using one of five other knots. A conformist learner can exploit this situation and jump directly to the blood knot without experience. Thus, the wisdom of crowds is built into our psychology. There is some laboratory evidence for conformist transmission, both in humans and sticklebacks (a fish), though there is not nearly as much as for the model-based cues discussed above. Nevertheless, when problems are difficult, uncertainty is high, or payoffs are on the line, people tend to use conformist transmission.24 Of course, we should expect learners to combine the learning heuristics I’ve described.


pages: 743 words: 201,651

Free Speech: Ten Principles for a Connected World by Timothy Garton Ash

"World Economic Forum" Davos, A Declaration of the Independence of Cyberspace, Aaron Swartz, activist lawyer, Affordable Care Act / Obamacare, Andrew Keen, Apple II, Ayatollah Khomeini, battle of ideas, Berlin Wall, bitcoin, British Empire, Cass Sunstein, Chelsea Manning, citizen journalism, Citizen Lab, Clapham omnibus, colonial rule, critical race theory, crowdsourcing, data science, David Attenborough, digital divide, digital rights, don't be evil, Donald Davies, Douglas Engelbart, dual-use technology, Edward Snowden, Etonian, European colonialism, eurozone crisis, Evgeny Morozov, failed state, Fall of the Berlin Wall, Ferguson, Missouri, Filter Bubble, financial independence, Firefox, Galaxy Zoo, George Santayana, global village, Great Leap Forward, index card, Internet Archive, invention of movable type, invention of writing, Jaron Lanier, jimmy wales, John Markoff, John Perry Barlow, Julian Assange, Laura Poitras, machine readable, machine translation, Mark Zuckerberg, Marshall McLuhan, Mary Meeker, mass immigration, megacity, mutually assured destruction, national security letter, Nelson Mandela, Netflix Prize, Nicholas Carr, obamacare, Open Library, Parler "social media", Peace of Westphalia, Peter Thiel, power law, pre–internet, profit motive, public intellectual, RAND corporation, Ray Kurzweil, Ronald Reagan, semantic web, Sheryl Sandberg, Silicon Valley, Simon Singh, Snapchat, social graph, Stephen Fry, Stephen Hawking, Steve Jobs, Steve Wozniak, Streisand effect, technological determinism, TED Talk, The Death and Life of Great American Cities, The Wisdom of Crowds, Tipper Gore, trolley problem, Turing test, We are Anonymous. We are Legion, WikiLeaks, World Values Survey, Yochai Benkler, Yom Kippur War, yottabyte

For when there are many, each has his share of goodness and practical wisdom’.182 The legal philosopher Jeremy Waldron calls this the ‘doctrine of the wisdom of the many’.183 Twenty-five hundred years ago, that was the original ‘crowdsourcing’. The internet offers us opportunities to create our own self-governing online communities and draw on the ‘wisdom of crowds’ across frontiers. Within the technical, legal and political outer limits set by the big cats and dogs, we can establish communities where we say: ‘we wish to conduct this debate by certain rules. If you don’t want to live by those rules, go somewhere else’. In the best case, what in the online world are usually called ‘community standards’ are exactly that—the self-determined standards of a self-governing community.


pages: 685 words: 203,949

The Organized Mind: Thinking Straight in the Age of Information Overload by Daniel J. Levitin

Abraham Maslow, airport security, Albert Einstein, Amazon Mechanical Turk, Anton Chekhov, autism spectrum disorder, Bayesian statistics, behavioural economics, big-box store, business process, call centre, Claude Shannon: information theory, cloud computing, cognitive bias, cognitive load, complexity theory, computer vision, conceptual framework, correlation does not imply causation, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, data science, deep learning, delayed gratification, Donald Trump, en.wikipedia.org, epigenetics, Eratosthenes, Exxon Valdez, framing effect, friendly fire, fundamental attribution error, Golden Gate Park, Google Glasses, GPS: selective availability, haute cuisine, How many piano tuners are there in Chicago?, human-factors engineering, if you see hoof prints, think horses—not zebras, impulse control, index card, indoor plumbing, information retrieval, information security, invention of writing, iterative process, jimmy wales, job satisfaction, Kickstarter, language acquisition, Lewis Mumford, life extension, longitudinal study, meta-analysis, more computing power than Apollo, Network effects, new economy, Nicholas Carr, optical character recognition, Pareto efficiency, pattern recognition, phenotype, placebo effect, pre–internet, profit motive, randomized controlled trial, Rubik’s Cube, Salesforce, shared worldview, Sheryl Sandberg, Skype, Snapchat, social intelligence, statistical model, Steve Jobs, supply-chain management, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Bayes, traumatic brain injury, Turing test, Twitter Arab Spring, ultimatum game, Wayback Machine, zero-sum game

., & Yates, B. (2008). How Wikipedia works: And how you can be a part of it. San Francisco, CA: No Starch Press, p. 514. More than 4.5 million people Kickstarter, Inc. (2014). Seven things to know about Kickstarter. Retrieved from http://www.kickstarter.com the group average comes Surowiecki, J. (2005). The wisdom of crowds. New York, NY: Penguin. and, Treynor, J. L. (1987). Market efficiency and the bean jar experiment. Financial Analysts Journal, 43(3), 50–53. the cancer is now in remission Iaconesi, S. (2012). TED (Producer). (2013). Why I open-sourced cures to my cancer: Salvatore Iaconesi at TEDGlobal 2013 [Video file].


pages: 677 words: 206,548

Future Crimes: Everything Is Connected, Everyone Is Vulnerable and What We Can Do About It by Marc Goodman

23andMe, 3D printing, active measures, additive manufacturing, Affordable Care Act / Obamacare, Airbnb, airport security, Albert Einstein, algorithmic trading, Alvin Toffler, Apollo 11, Apollo 13, artificial general intelligence, Asilomar, Asilomar Conference on Recombinant DNA, augmented reality, autonomous vehicles, Baxter: Rethink Robotics, Bill Joy: nanobots, bitcoin, Black Swan, blockchain, borderless world, Boston Dynamics, Brian Krebs, business process, butterfly effect, call centre, Charles Lindbergh, Chelsea Manning, Citizen Lab, cloud computing, Cody Wilson, cognitive dissonance, computer vision, connected car, corporate governance, crowdsourcing, cryptocurrency, data acquisition, data is the new oil, data science, Dean Kamen, deep learning, DeepMind, digital rights, disinformation, disintermediation, Dogecoin, don't be evil, double helix, Downton Abbey, driverless car, drone strike, Edward Snowden, Elon Musk, Erik Brynjolfsson, Evgeny Morozov, Filter Bubble, Firefox, Flash crash, Free Software Foundation, future of work, game design, gamification, global pandemic, Google Chrome, Google Earth, Google Glasses, Gordon Gekko, Hacker News, high net worth, High speed trading, hive mind, Howard Rheingold, hypertext link, illegal immigration, impulse control, industrial robot, information security, Intergovernmental Panel on Climate Change (IPCC), Internet of things, Jaron Lanier, Jeff Bezos, job automation, John Harrison: Longitude, John Markoff, Joi Ito, Jony Ive, Julian Assange, Kevin Kelly, Khan Academy, Kickstarter, Kiva Systems, knowledge worker, Kuwabatake Sanjuro: assassination market, Large Hadron Collider, Larry Ellison, Laura Poitras, Law of Accelerating Returns, Lean Startup, license plate recognition, lifelogging, litecoin, low earth orbit, M-Pesa, machine translation, Mark Zuckerberg, Marshall McLuhan, Menlo Park, Metcalfe’s law, MITM: man-in-the-middle, mobile money, more computing power than Apollo, move fast and break things, Nate Silver, national security letter, natural language processing, Nick Bostrom, obamacare, Occupy movement, Oculus Rift, off grid, off-the-grid, offshore financial centre, operational security, optical character recognition, Parag Khanna, pattern recognition, peer-to-peer, personalized medicine, Peter H. Diamandis: Planetary Resources, Peter Thiel, pre–internet, printed gun, RAND corporation, ransomware, Ray Kurzweil, Recombinant DNA, refrigerator car, RFID, ride hailing / ride sharing, Rodney Brooks, Ross Ulbricht, Russell Brand, Salesforce, Satoshi Nakamoto, Second Machine Age, security theater, self-driving car, shareholder value, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, SimCity, Skype, smart cities, smart grid, smart meter, Snapchat, social graph, SoftBank, software as a service, speech recognition, stealth mode startup, Stephen Hawking, Steve Jobs, Steve Wozniak, strong AI, Stuxnet, subscription business, supply-chain management, synthetic biology, tech worker, technological singularity, TED Talk, telepresence, telepresence robot, Tesla Model S, The future is already here, The Future of Employment, the long tail, The Wisdom of Crowds, Tim Cook: Apple, trade route, uranium enrichment, Virgin Galactic, Wall-E, warehouse robotics, Watson beat the top human players on Jeopardy!, Wave and Pay, We are Anonymous. We are Legion, web application, Westphalian system, WikiLeaks, Y Combinator, you are the product, zero day

The boss’s gamification strategy paid off and received widespread attention among his workers, with the Ferrari reserved for the chosen “employee of the month.” From Crowdsourcing to Crime Sourcing Of all the business innovation techniques utilized by Crime, Inc., perhaps none has been as widely adopted as crowdsourcing. Crowdsourcing began as a legitimate tool to leverage the wisdom of crowds to solve complex business and scientific challenges. The concept of crowdsourcing first gained widespread attention in an article written in 2006 by Jeff Howe for Wired. Howe defined crowdsourcing as the act of “outsourcing a task to a large, undefined group of people through an open call.”


pages: 691 words: 203,236

Whiteshift: Populism, Immigration and the Future of White Majorities by Eric Kaufmann

4chan, Abraham Maslow, affirmative action, Amazon Mechanical Turk, anti-communist, anti-globalists, augmented reality, battle of ideas, behavioural economics, Berlin Wall, Bernie Sanders, Boris Johnson, Brexit referendum, British Empire, centre right, Chelsea Manning, cognitive dissonance, complexity theory, corporate governance, correlation does not imply causation, critical race theory, crowdsourcing, Daniel Kahneman / Amos Tversky, data science, David Brooks, deindustrialization, demographic transition, Donald Trump, Elon Musk, en.wikipedia.org, facts on the ground, failed state, fake news, Fall of the Berlin Wall, first-past-the-post, Francis Fukuyama: the end of history, gentrification, Great Leap Forward, Haight Ashbury, Herbert Marcuse, illegal immigration, immigration reform, imperial preference, income inequality, it's over 9,000, Jeremy Corbyn, knowledge economy, knowledge worker, liberal capitalism, longitudinal study, Lyft, mass immigration, meta-analysis, microaggression, moral panic, Nate Silver, New Urbanism, Norman Mailer, open borders, open immigration, opioid epidemic / opioid crisis, Overton Window, phenotype, postnationalism / post nation state, Ralph Waldo Emerson, Republic of Letters, Ronald Reagan, Scientific racism, Silicon Valley, Social Justice Warrior, statistical model, Steve Bannon, Steven Pinker, the built environment, the scientific method, The Wisdom of Crowds, transcontinental railway, twin studies, uber lyft, upwardly mobile, urban sprawl, W. E. B. Du Bois, Washington Consensus, white flight, working-age population, World Values Survey, young professional

If it includes left-leaning institutions like the Canadian Broadcasting Corporation (CBC), it puts right-wingers off. Far better to crowd-source national symbols and allow people to read what they want into them, picking and choosing what moves them. This leverages people’s unique vantage points, realizing the wisdom of crowds. Politicians can affirm a multi-vocal understanding of nationhood by tuning into particular audiences. When speaking to liberals or an ethnically diverse crowd, they can talk about diversity and multiculturalism. When addressing conservative whites, it’s important to nod to white majority ethno-traditions.


pages: 669 words: 210,153

Tools of Titans: The Tactics, Routines, and Habits of Billionaires, Icons, and World-Class Performers by Timothy Ferriss

Abraham Maslow, Adam Curtis, Airbnb, Alexander Shulgin, Alvin Toffler, An Inconvenient Truth, artificial general intelligence, asset allocation, Atul Gawande, augmented reality, back-to-the-land, Ben Horowitz, Bernie Madoff, Bertrand Russell: In Praise of Idleness, Beryl Markham, billion-dollar mistake, Black Swan, Blue Bottle Coffee, Blue Ocean Strategy, blue-collar work, book value, Boris Johnson, Buckminster Fuller, business process, Cal Newport, call centre, caloric restriction, caloric restriction, Carl Icahn, Charles Lindbergh, Checklist Manifesto, cognitive bias, cognitive dissonance, Colonization of Mars, Columbine, commoditize, correlation does not imply causation, CRISPR, David Brooks, David Graeber, deal flow, digital rights, diversification, diversified portfolio, do what you love, Donald Trump, effective altruism, Elon Musk, fail fast, fake it until you make it, fault tolerance, fear of failure, Firefox, follow your passion, fulfillment center, future of work, Future Shock, Girl Boss, Google X / Alphabet X, growth hacking, Howard Zinn, Hugh Fearnley-Whittingstall, Jeff Bezos, job satisfaction, Johann Wolfgang von Goethe, John Markoff, Kevin Kelly, Kickstarter, Lao Tzu, lateral thinking, life extension, lifelogging, Mahatma Gandhi, Marc Andreessen, Mark Zuckerberg, Mason jar, Menlo Park, microdosing, Mikhail Gorbachev, MITM: man-in-the-middle, Neal Stephenson, Nelson Mandela, Nicholas Carr, Nick Bostrom, off-the-grid, optical character recognition, PageRank, Paradox of Choice, passive income, pattern recognition, Paul Graham, peer-to-peer, Peter H. Diamandis: Planetary Resources, Peter Singer: altruism, Peter Thiel, phenotype, PIHKAL and TIHKAL, post scarcity, post-work, power law, premature optimization, private spaceflight, QWERTY keyboard, Ralph Waldo Emerson, Ray Kurzweil, recommendation engine, rent-seeking, Richard Feynman, risk tolerance, Ronald Reagan, Salesforce, selection bias, sharing economy, side project, Silicon Valley, skunkworks, Skype, Snapchat, Snow Crash, social graph, software as a service, software is eating the world, stem cell, Stephen Hawking, Steve Jobs, Stewart Brand, superintelligent machines, TED Talk, Tesla Model S, The future is already here, the long tail, The Wisdom of Crowds, Thomas L Friedman, traumatic brain injury, trolley problem, vertical integration, Wall-E, Washington Consensus, We are as Gods, Whole Earth Catalog, Y Combinator, zero-sum game

Frankl), The Fourth Turning; Generations (William Strauss), Slow Sex (Nicole Daedone), Mindset (Carol Dweck) Rodriguez, Robert: Start with Why: How Great Leaders Inspire Everyone to Take Action (Simon Sinek) Rogen, Seth: Watchmen (Alan Moore), Preacher (Garth Ennis), The Hitchhiker’s Guide to the Galaxy (Douglas Adams), The Art of Dramatic Writing (Lajos Egri), The Conquest of Happiness (Bertrand Russell) Rose, Kevin: The Miracle of Mindfulness: An Introduction to the Practice of Meditation (Thich Nhat Hanh), The Wisdom of Crowds (James Surowiecki) Rowe, Mike: The Deep Blue Good-by; Pale Gray for Guilt, Bright Orange for the Shroud; The Lonely Silver Rain, Nightmare in Pink; A Tan and Sandy Silence; Cinnamon Skin (John D. MacDonald), At Home: A Short History of Private Life; The Lost Continent: Travels in Small-Town America (Bill Bryson), A Curious Discovery: An Entrepreneur’s Story (John Hendricks) Rubin, Rick: Tao Te Ching (Lao Tzu, translation by Stephen Mitchell), Wherever You Go, There You Are (Jon Kabat-Zinn) Sacca, Chris: Not Fade Away: A Short Life Well Lived (Laurence Shames and Peter Barton), The Essential Scratch & Sniff Guide to Becoming a Whiskey Know-It-All; The Essential Scratch & Sniff Guide to Becoming a Wine Expert (Richard Betts), How to Get Filthy Rich in Rising Asia: A Novel (Mohsin Hamid), I Seem to Be a Verb (R.


pages: 798 words: 240,182

The Transhumanist Reader by Max More, Natasha Vita-More

"World Economic Forum" Davos, 23andMe, Any sufficiently advanced technology is indistinguishable from magic, artificial general intelligence, augmented reality, Bill Joy: nanobots, bioinformatics, brain emulation, Buckminster Fuller, cellular automata, clean water, cloud computing, cognitive bias, cognitive dissonance, combinatorial explosion, Computing Machinery and Intelligence, conceptual framework, Conway's Game of Life, cosmological principle, data acquisition, discovery of DNA, Douglas Engelbart, Drosophila, en.wikipedia.org, endogenous growth, experimental subject, Extropian, fault tolerance, Flynn Effect, Francis Fukuyama: the end of history, Frank Gehry, friendly AI, Future Shock, game design, germ theory of disease, Hans Moravec, hypertext link, impulse control, index fund, John von Neumann, joint-stock company, Kevin Kelly, Law of Accelerating Returns, life extension, lifelogging, Louis Pasteur, Menlo Park, meta-analysis, moral hazard, Network effects, Nick Bostrom, Norbert Wiener, pattern recognition, Pepto Bismol, phenotype, positional goods, power law, precautionary principle, prediction markets, presumed consent, Project Xanadu, public intellectual, radical life extension, Ray Kurzweil, reversible computing, RFID, Ronald Reagan, scientific worldview, silicon-based life, Singularitarianism, social intelligence, stem cell, stochastic process, superintelligent machines, supply-chain management, supply-chain management software, synthetic biology, systems thinking, technological determinism, technological singularity, Ted Nelson, telepresence, telepresence robot, telerobotics, the built environment, The Coming Technological Singularity, the scientific method, The Wisdom of Crowds, transaction costs, Turing machine, Turing test, Upton Sinclair, Vernor Vinge, Von Neumann architecture, VTOL, Whole Earth Review, women in the workforce, zero-sum game

This section includes three domains of thought that explore thinking processes and issues through the lenses of ­economics, applied philosophy, and electronic hyperlink theory. Robin Hanson’s “Idea Futures” was an early explication of a mechanism that has since come to be known as “decision markets.” These markets harness the “wisdom of crowds” to improve decision-making and forecasting accuracy. Subsequent work has shown how decision markets typically yield results more accurate than those from the best experts in areas as diverse as ­predicting sales of printer supplies and box-office take for movies in their first days of release.


pages: 898 words: 266,274

The Irrational Bundle by Dan Ariely

accounting loophole / creative accounting, air freight, Albert Einstein, Alvin Roth, An Inconvenient Truth, assortative mating, banking crisis, Bear Stearns, behavioural economics, Bernie Madoff, Black Swan, Broken windows theory, Burning Man, business process, cashless society, Cass Sunstein, clean water, cognitive dissonance, cognitive load, compensation consultant, computer vision, Cornelius Vanderbilt, corporate governance, credit crunch, Credit Default Swap, Daniel Kahneman / Amos Tversky, delayed gratification, Demis Hassabis, Donald Trump, end world poverty, endowment effect, Exxon Valdez, fake it until you make it, financial engineering, first-price auction, Ford Model T, Frederick Winslow Taylor, fudge factor, Garrett Hardin, George Akerlof, Gordon Gekko, greed is good, happiness index / gross national happiness, hedonic treadmill, IKEA effect, Jean Tirole, job satisfaction, John Perry Barlow, Kenneth Arrow, knowledge economy, knowledge worker, lake wobegon effect, late fees, loss aversion, Murray Gell-Mann, name-letter effect, new economy, operational security, Pepsi Challenge, Peter Singer: altruism, placebo effect, price anchoring, Richard Feynman, Richard Thaler, Saturday Night Live, Schrödinger's Cat, search costs, second-price auction, Shai Danziger, shareholder value, Silicon Valley, Skinner box, Skype, social contagion, software as a service, Steve Jobs, subprime mortgage crisis, sunk-cost fallacy, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tragedy of the Commons, ultimatum game, Upton Sinclair, Walter Mischel, young professional

—Jerome Groopman, New York Times bestselling author of How Doctors Think “Dan Ariely is a genius at understanding human behavior: no economist does a better job of uncovering and explaining the hidden reasons for the weird ways we act, in the marketplace and out. Predictably Irrational will reshape the way you see the world, and yourself, for good.” —James Surowiecki, author of The Wisdom of Crowds “Predictably Irrational is a charmer—filled with clever experiments, engaging ideas, and delightful anecdotes. Dan Ariely is a wise and amusing guide to the foibles, errors, and bloopers of everyday decision-making.” —Daniel Gilbert, Professor of Psychology, Harvard University, and author of Stumbling on Happiness “Predictably Irrational is going to be the most influential, talked-about book in years.